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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Thomas F. O'Connor who wrote (12017)	12/21/1997 9:46:00 AM
From: Tommaso	Respond to of 18056

"But my point being that if a reduction in rates occurred, there would be a unexpected sharp rise in the markets and a very adverse effect on the shorts." I think that's probably correct. But as we see in Japan and as our own country saw in the 1930s, low short terms rates in themselves cannot guarantee a continually rising market. Because the Fed (at least Greenspan) is clearly on record as thinking the stock market at least 20% too high, I wonder if they would make that move (i.e. lower short term rates) until there has been that much of a correction in the market. They already seem to be expanding the money supply to cushion deflation. I do think we might see a rate cut if the S&P dropped to about 750. For that reason, I will be getting out of my short positions (mainly in BEARX) as soon as I see about a 25% profit. That's not so far away--for me, BEARX already shows a 10% gain. I think you are right, that a rate cut would produce a bounce in the market that could wipe out people who were short at that level. But these are all guesses. Thanks for the dialogue. Maybe if we keep talking we can hit on the truth.

To: Thomas F. O'Connor who wrote (12017)	12/21/1997 12:01:00 PM
From: Joseph G.	Respond to of 18056

<<But my point being that if a reduction in rates occurred, there would be a unexpected sharp rise in the markets and a very adverse effect on the shorts.>> Then don't short. Or is it, your humanitarian love of shorts prompts you to worn your lesser brothers? Was it you who taught Warren Buffet how to invest? If only he listened better to your teaching ... Joe