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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: macavity who wrote (16246)	2/10/2003 11:52:09 AM
From: dvdw©	Respond to of 19219

Mac I agree with your assessment regarding pension fund selling, and the likelihood of this happening has a high degree of probability attached to it. I believe this fits nicely into my characterizing the market as CHURN, this being just another phase. Within the context of a well structured portfolio an investor must be aware of the impact these funds have through ownership in individual stocks, for myself, I've done this work long ago and fortunately i can say that most all of my mid caps and small caps with low floats have miniscule exposures to Pension funds. By way of example; Small and mid cap companies with low free floats are difficult to buy, building large positions takes time and considerable effort, most pension funds wont tolerate this, they are hell bent to preserve liquidity and are deployed rightfully where liquidity is optimized. Problem for many of the big liquidity plays is that they are in low growth mode and cant sustain market caps with high debt to equity ratios. Distribution from the highs works in stages and can take years to complete as the various types of owners are shaken out according to their particular sensitivity to conditions on a time line. These sensitivities always manifest sequentialy in a bear market. This is seen as waves of selling usually fueled by a group of affected investors all reacting at about the same time. Understanding that there are complex phenomena behind the market, which are difficult to quantify. It is imperative that investors spread their risk across a wide range of investments that are under accumulation; or just play the short side where it is clear the individual companies have ownership metrics soon to be affected by the Churn your describing in your post. All action happens against the float;