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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (15502)	9/24/2002 1:11:50 PM
From: Don Earl	Read Replies (1) \| Respond to of 78699

Timba, Good luck on your options. Who knows, with the way the market is going, they may be in the money before they expire. My account is currently mostly puts, which I would normally consider insane, except it's about the only way I can see to make money in this market. The way things look right now, the Dow will crack support any day, and I wouldn't be surprised to see it trading in the mid to upper 6000 range in the next month or so. The contracts I'm holding expire in January and March. Most of the positions were opened about the middle of the August rally, so I've been under water for most of the last month. Since my timing isn't always perfect, I normally target longer dated contracts to give myself some time cushion. I'm not sure if my current strategy would make sense to anyone other than myself, but I've been picking issues that look like they should be no brainers for long play where the trend says there is something seriously wrong not being priced into current valuations. I think a lot of what we're starting to see is very similar to what happened when SAB 101 went into effect. No one was willing to admit there was exposure to the rule change, a lot of companies decided not to apply the rule change, and a lot of companies started reporting substantially lower earnings for no apparent reason. It looks like the CEO/CFO certifications are going to play out the same way. Phase one is, "Ain't nothin' wrong with the books.". Phase two is, "The economy is killing our results.". Plus there'll be a few QWests and Xeroxes along the way. There are a lot of issues I wouldn't mind holding long in a different market, but I can't see sitting on losses for an extended period of time by betting against the trend. I think there'll eventually be a lot of value plays of the "obsurd" variety, but I also think the market will have to correct by around another 30-40% before it will be safe enough to buy and hold. I'd rather be holding mostly cash when the market finally bottoms than a lot of stock worth less than I paid for it.