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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: kodiak_bull who wrote (22658)	1/4/2005 8:01:30 PM
From: The Ox	Read Replies (1) \| Respond to of 23153

I'm not sure that the final results will follow the dashed arrows pointing to a sharp, sustained correction. Not to mention that the underlying (individual) stocks don't have to follow these charts at all. The first issue is how fast will interest rates rise in 2005? Will the economy continue at the expected pace, GDP of 3.5% or will it deviate from this prediction (up or down)? I think once an obvious down trend is established that shows a clear reversal, then I would consider shorting the homeboys. I don't need to be a hero and predict the absolute top. I'd rather take some safe money and ride the wave down at this stage...but I'm sure there are others who will try to time it perfectly and to them I say: good luck and happy surfing!

To: kodiak_bull who wrote (22658)	1/5/2005 1:03:00 PM
From: bull_derrick	Read Replies (1) \| Respond to of 23153

I switched over right before Christmas from a long portfolio primarily of cyclicals, which I had initiated on the afternoon of the election, to a portfolio of high yield bond funds, preferred stocks in around the BBB area, and a few mortgage REITs. The 401K where I have limited choices imposed on me by my employer, went to cash. The one thing missing was some counter play to this interest rate sensitivity, which was one of the reasons I went long on some TOL puts yesterday. This morning starting around 10:30, the REIT's started plunging, and the mortgage REITS that I hold (only about 6% of assets) are plunging with the sector. On the other hand, the TOL puts are increasing in value today and more than offsetting the fixed income declines. In the best of all scenarios, I book a profit on TOL when it hits the 50 ma, collect a dividend on all the fixed income stuff and the fixed income stuff recovers a bit in a couple of months when the market isn't quite as freaked about Fed rates as it is today. BTW, the fixed income stuff I have is all 8-10% stuff. The spreads in quality have been extreme before Christmas and the 3-4% yield REITs are falling harder and faster today than the higher yield stuff. My bond fund purchases are all short term maturity stuff as I don't want to go too far out on the yield curve as I think that has the most to change at this point.