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Strategies & Market Trends : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: Susan G who wrote (21911)	8/2/2002 5:46:30 PM
From: kendall harmon	Read Replies (5) \| Respond to of 26752

Lessons of the Bear Kendall Harmon www.realmoney.com Trading Diary 8/02/02 11:27 AM ET "The Israelites made a golden calf because they didn't have enough gold to make a cow." -- Actual Sunday school paper The last 28 months of this brutal bear market have been tough on everyone's nerves. People have lost money, sleep, and some feel barely alive. But amid all the suffering, it is worth pausing to note some of the lessons we have been taught. Whether last week's rally is a meaningful turn of the market, or more pain lies ahead, these lessons will endure. I am keeping a record of some of the things I have learned. Are you? 1. I underestimated the virulence of the later stage of the bear. Early on in 2002, many small-caps in particular did well. If your portfolio consisted of the right stocks, to some extent you were shielded from some of the damage of the market in its earlier stages. This led me, at least, to be lulled into forgetting the overall market backdrop. I should have stayed more cautious in terms of taking long positions in general. 2. I underestimated the significance of the breakdown in the Russell 2000. A three-month chart of the Russell really bears close examination in retrospect. Once it topped out in early April up near 525, it really got taken apart (reaching a 30%-plus decline in two months to its intraday July low). When the Russell 2000 first broke its 200-day moving average line, it was a key tell. Not only should I have been cautious to be holding longs in general, but I should have been more careful about holding small-caps once the key small-cap index broke down. This led me to keep winners like TCHC and TENT too long. One by one they went through the various industry groups and the bear clawed them; they eventually crushed insurers and restaurants too. 3. I should have done a better job shorting. I don't know about you, but I struggle on the short side. Maybe it is because I began in the market in the late 1980's and it was the side to be on (mostly). Maybe because it is because I have failed to learn to turn charts upside down and think in terms of a stock breaking resistance to the downside as a short candidate, instead of a stock breaking resistance to the upside as a long candidate (it's the same principle). In any event, I should have been more focused on the value of shorts throughout this bear more consistently. I did one thing right, however, and that was to stick to three key sell disciplines. I always took partial profits on a rising stock -- a gain is a gain. Also on long-side entries I kept a predetermined mental stop before I entered a trade, and I sold any stock that broke its 50-day moving average to the downside no matter what. It is one thing to be wrong, but it is another to stay wrong -- remember the market always knows more than you do and needs to be deferred to. Yes, in answer to some emails, I am up for the year. Also, in answer to some others, I gave too much of it back in the May-June period. While I may have less of a gain, I have greater knowledge. You do too. Make sure to store up the lessons of the bear because they will be valuable in the future. No positions

To: Susan G who wrote (21911)	8/2/2002 9:56:34 PM
From: Bob Biersack	Read Replies (1) \| Respond to of 26752

A weekend laugh or two...I like #28 Too! #22 applies to the market this week <g> 1. Food has replaced sex in my life, now I can't even get into my own pants. 2. The closest I ever got to a 4.0 in school was my blood alcohol content. 3. Marriage changes passion...suddenly you're in bed with a relative. 4. I saw a woman wearing a sweat shirt with "Guess" on it...so I said "Implants?" 5. I don't do drugs anymore 'cause I find I get the same effect just standing up fast. 6. Sign in a Chinese Pet Store: "Buy one dog, get one flea..." 7. I have my own little world. But it's OK...they know me here. 8. Money can't buy happiness, but it sure makes misery easier to live with. 9. I got a sweater for Christmas...I really wanted a screamer or a moaner. 10. If flying is so safe, why do they call the airport the terminal? 11. I don't approve of political jokes...I've seen too many of them get elected. 12. The most precious thing we have is life. Yet it has absolutely no trade-in value. 13. There are two sides to every divorce: Yours and shithead's. 14. If life deals you lemons, make lemonade; if it deals you tomatoes, make Bloody Marys. But if it deals you a truckload of hand grenades...now THAT'S a message! 15. I love being married. It's so great to find that one special person you want to annoy for the rest of your life. 16. Shopping tip: You can get shoes for 85 cents at the bowling alley. 17. I am a nobody, and nobody is perfect; therefore I am perfect. 18. I married my wife for her looks...but not the ones she's been giving me lately! 19. Everyday I beat my own previous record for number of consecutive days I've stayed alive. 20. Isn't it funny how the mood can be ruined so quickly by just one busted condom. 21. If carrots are so good for the eyes, how come I see so many dead rabbits on the highway? 22. Welcome to Shit Creek -- Sorry, We're Out of Paddles! 23. How come we choose from just two people to run for president and 50 for Miss America? 24. Isn't having a smoking section in a restaurant like having a peeing section in a swimming pool? 25. Why is it that most nudists are people you don't want to see naked? 26. Snowmen fall from Heaven unassembled. 27. Every time I walk into a singles bar I can hear Mom's wise words: "Don't pick that up, you don't know where it's been! 28. Redheads really got their Shit Together and are totally "ASSembled"