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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (16069)	2/10/2003 3:35:41 PM
From: Logain Ablar	Read Replies (2) \| Respond to of 57684

Lizzie: Many things change and many things stay the same. Capitulation can happen line 87 with that vix spike or it can be a slow grind (which is what we've been in since Oct of 2000, with some bear market rallies) Last week I was checking some MF rankings in Money and a Vanguard Fund down 20+% last year was rated A in bear markets. Amazing that a fund can lose so much and be rated an A, imagine what a C did) Since Vincik (sp) was pushed out of running the Magellan Fund @ Fidelity most fund families and fund managers don't hold cash or take large bets against their bench mark (they under perform the bench mark they are gone) so today compared to prior years we have funds till 95% invested. Typically when investors start raising cash during a capitulation it puts an inordinate amount of pressure on a fund manager as he/she ends up having to sell their must liquid holdings (since there are just no buyers for small caps). This feeds on itself and typically takes the indexes down. I believe this is why the generals are the last to fall. Not only are they typically solid companies from an earnings, balance sheet standpoint but they are widely held, liquid and sold after the funds dispose of the smaller co's. I don't know if we continue the slow grind or have sudden capitulation but to me it looks like we continue to grind, set new lows by the summer and then have a prolonged rally. Between the FED easing, stimulus package and a drop in oil (I did say summer, but of course oil may not be gasoline as we do have a refinery problem here in the US) I do expect a robust recovery starting no later than September (and assume stocks anticipate this in May - July period) but who knows for sure with IRAQ. It will still be a stock pickers market and the way to find winners is find the stocks that have bucking the trend in the down market. I know you like software but there should be other areas as well. Stay away from semi equipment. Equipment companies typically follow the chip companies so until the chip companies start showing some life the equip co's are dead money.