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To: yard_man who wrote (198725)	10/19/2002 5:20:43 PM
From: mishedlo	Read Replies (4) \| Respond to of 436258

Here is my rant of the day. Soapbox. It was another exciting week. Let's see. We had an equity derivatives options expiry meltup. We had a bond derivatives meltdown. We had yet another hedge fun blown out of the water on huge derivative positions that supposedly had a minute chance of ever failing. We have trading programs automatically buy when VIX hits 50, buy when tick counts hit -1000, and arbitrage buys or sells when there is some perceived or real discrepancy of stocks being out of proper alignment with the index. Is the stock market now completely run by hedge funds and program trading? Let's just put EVERYTHING on autopilot trading. No risk there, is there? Not as long as we have the “The Invisible Hand” that appears most mornings to pump the futures at 3:00AM. JPM and FNM are up to their eyeballs in derivatives, but don't worry, the odds of another derivative failure must be incredibly small especially after we have had two already. After all, lighting never strikes three times in the same place, or never twice in a year. Greenspan himself has stated that derivatives are helping to keep our economy together or some nonsense like that. FNM and GE can not explain their books, but don't worry there is ZERO chance of these books being like TYC or ENE. Once again after this rally “the charts look good”. Ohhhh look at this chart that chart, “how did I ever miss NXTL?” Damn. Bulls are salivating over the opportunity “to buy the dip”. Two different EWAVE sites on SI that have been predominantly bearish can't wait to buy this dip. We also have elections coming up. The invisible hand will be there to support that dip buy won't it? Of course this is also the strong time of the year and Abby Conehead suggests there was never a better time to buy. The stock market is 40% undervalued. That was a few weeks ago. Must have been 55% undervalued last week. Will it be 80% undervalued at the bottom? Everyone is waiting to buy this dip. That means one of two things to me. 1) There is no dip and the meltup continues until short are totally crushed (which of course precipitates the mother of all plunges as everyone scrambles to take their profits out all at once) 2) You do not even want to begin thinking about buying this dip cause we are gonna stall there for 1.5 days as the wedge builds and excitement builds and money comes purring in and voilla the wedge breaks down in a sudden death spiral We have had an enormous runup here.Yet I hear talk of averaging in long. I am starting to hear more buy for the long haul believers. Yet, here we are, housing about finished (of course I have been saying this for months or longer, but at least the charts reflect that for now), the consumer is about tapped out (same story). I guess no one believes the consumer will stop spending or housing will die. This time is different. Debt does not matter. The trade deficit does not matter. Greenspan will bail us out. Too much talk of a housing bubble. Practically everyone who believed it was a bubble has forgotten about it or has become convinced it is no longer true. The Philly Fed numbers and consumer confidence numbers and employment numbers were total disasters. Nothing natters in a meltup NOTHING. I am suspicious about those numbers, with the obvious future pumping were those numbers “revised” lower than real so as to provide a cushion for the next set of lies, uh I mean numbers. Does anyone really think this action is healthy with holes all over the charts? Does anyone care whether or not it is healthy? I guess if I thought things were going up from here I would buy calls, but I think I am going to stick with the long term trend. If nothing matters in a meltup, what about meltdown? Will it matter that stocks are 75% “undervalued”? One of these days we are going to plunge 500-750 DOW points in a few hours then gap down lock limit the next day. Then a small rally sucks in more dip buyers. And another lock limit gap down occurs the next day. Of course the odds of that happening are remote, aren't they? The odds of another hedge fund blowup were astronomically remote weren't they? The odds of a derivative blowup at JPM or C or FNM are extremely remote as well. Nah, there is virtually no chance of someone blowing up the Sears tower either. If someone does blow up the sears tower, don't worry we have risk insurance spread all around with derivatives here there and everywhere so everyone gains by the increased premiums more than enough to cover any remote chances of another disaster like the WTC. I almost forgot about municipal bonds. How many state governments are insolvent? Is this a problem? Since no one is talking about this I have to wonder. Who pays if cities or states default? Has it happened? Can states declare bankruptcy? I do not have any knowledge in this area. I am not chasing any common stock long on an overnight basis. Period. I do not care what the charts look like. I may buy calls but I think I prefer to remain heavy in cash and leap puts. Of course this could be the bottom. Some think it is THE bottom. They could be right. Will I get crushed in my leap puts if it is? Perhaps, but not necessarily. I intend to have the bulk of my positions in fundamentally flawed businesses and GTZ candidates I will also from time to time hedge with index calls as appropriate. Housing will turn so I will keep leap puts on that as well. Eventually I will be correct. Hopefully leaps give me the time I need to be correct. In the meantime, I see the risk to the long side not the short side, especially after this runup. Look at the chart of F. It is a thing of beauty. Fiber companies ran to ZERO regardless of any rallies. Why won't autos, airlines, and other deep in debt companies. Hmmmm. What is the better bet here: 1)This is the bottom and it a good time to buy stocks 2)Now is a good time to just stay short GTZ's and companies hugely in debt and wait for the inevitable Note: there is no telling how far this run can go even if it is not the bottom. It could last for months. Some of these companies have fundamentals so bad that they underperformed every preceding rally (F comes to mind, S comes to mind as well) and just could keep plunging whether or not the bottom is in for everything else. Brazil worries? Credit crunch in S America. Plunging profits at banks. Not to worry! In the meantime, don't worry “the bottom” is obviously in. We don't care about PE's or fundamentals, or anything for that matter, we just want to catch the bottom. Ask anyone. Most are waiting to buy this dip. I might, but I sure am not loading the boat, and it will be with calls not common, and it will likely be as a hedge not as a primary position. M