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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: lightwave51 who wrote (16365)	8/2/2002 5:01:53 PM
From: Tim Bagwell	Read Replies (2) \| Respond to of 42834

So let me see if I understand this scenario. You are a market guru and you've just timed the top of a secular bull market which gained 1400% and took market PE's to the highest level in history. You preached correctly for months about excessive valuations that have resulted in a huge bubble. You know full well the stories of financial mania's from the past. Granted, you didn't have a clear signal of the top but it was a pretty good call nonetheless. Now looking in the future you suspect the bear could take the excesses in the market down as much as 70%. After a few months your prediction of the top begins to take shape and you begin to get the drop you saw coming. You begin to think life is good as a market guru. I am omnipotent. Now you look at some historical data and you get the notion that a counter trend rally might develop. Maybe you eye a chart or two that suggests a point of support. Maybe you get a little greedy. Maybe you let your notion that you are a market guru get the best of you. In any event, you decide to throw caution into the junk heap and enter a risky trade against the already established trend, which you correctly predicted would occur. You begin to mock the crowd that would short the market. They are mere "rank amateurs" you say to your friends. Then you really get cocky and tell all your friends to buy QQQ immediately for a 20% pop. Uhh...wait a minute??? What's my downside risk here, you ask yourself? What if I am wrong, what will I do? How will my friends be affected? Does the downside risk outweight the possibility of a 20% pop? Since this is a bear market, will there be a better time when the risk is lower to bet on a CTR? NO FRIK'N WAY!!! You say to yourself. I am a market guru! The market then declines precipitously along the same course that you correctly predicted initially. Your 20% pop soon turns into an expected 70% loss and you have no plan for what to do. Now who looks like the amateur?