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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (14200)	10/7/2003 3:19:33 PM
From: Wyätt Gwyön	Respond to of 306849

you should have been short oracle- it has actually lost ground in this huge rally now she tells me :) it is the rare tech stock that lost ground in this rally. take my word for it that the tech stocks i was short had lousy fundamentals, but idiots kept buying them. there was no good method to predict ex ante which stocks those would be. in general, the worse the fundamentals, the better a stock has performed throughout the rally. contraryinvestor.com had a very interesting chart last week, where they showed bar graphs of stock performance during the rally, grouped by stock price. the best performing group by far was the under $5 group. this group had average gains of over 200%. the next best group was $5-$10 (100% avg gains), then $10-$15, and so on. all the way up to the "above $60" group, there was an inverse correlation between initial stock price and subsequent performance. thus for one has access to a reliable time machine that could transport one to the Oct 02 lows, a great strategy would have been to load up on under $5 stocks while shorting calls on stocks over $60. 20-20 hindsight's great, ain't it? but i'm not complaining too much. i had much larger exposure to gold miners than to shorts, and most of my shorts were not techs.