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Strategies & Market Trends : Bear! -- Ignore unavailable to you. Want to Upgrade?

To: Steve Joyce who wrote (4)	4/21/1998 2:09:00 PM
From: seminole	Respond to of 291

Steve When I get worried about the economy, interest rates, or valuations, I reduce my risks by putting new money and money from the sale of stocks into intermediate term bond funds. I try to reduce my portfolios risk by getting off margin, buying lower risk (lower betas) stocks and I focus on companies already punished. I move mutual fund money to more conservative growth and income funds. I may never be out during a bear market, I just try to reduce the pain. richard

To: Steve Joyce who wrote (4)	4/26/1998 8:51:00 AM
From: Terrapin	Read Replies (2) \| Respond to of 291

Hi Steve, I am not in the Financial Services industry - I am one of those people that make value investors worry when they see somebody like me turning a profit on a stocks! <g> Anyways, I'm glad to be able to discuss these things with somebody "in the business". What I'd like to talk about is the "Mutual/Retirement Fund Inflow Theory" of hyper-inflated market valuations. (The idea being that money is being forced into equities and, frankly, has to go somewhere.) The performance of stocks in popular indices seems to be driven by the availability of index funds in retirement plans, etc. I've been scolded by people who say that it isn't that simple and, of course, there are caveats and exceptions, but the huge flow of money into equities and the competitive need for mutual fund managers to keep that money invested would seem to prevent a true bear market. Sector-by-sector corrections are apparent as money leaves one area for another by a large-scale sell-off seems unlikely until the boomers begin to withdrawal money for retirement (starting 10-15yrs from now), major foreign crises (the asian thing apparently wasn't enough - although the jury is still out), major US political upheaval (read: Ken Starr), or other events that may not be on the radar screen. Anyway, I was hoping you could comment on the validity of this theory. It makes sense on a common sense level. Thanks in advance, John