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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Arik T.G. who wrote (18481)	5/14/1998 11:27:00 AM
From: Chip McVickar	Read Replies (1) \| Respond to of 94695

Hello Arik Thank you very much for your in-put. There's a lot of 'cognitive dissonance' rumbling around in the attic that is causing me to re-think a longterm strategy. Many of us held through the 1987 (non-event)....even bought at the bottom to ride this 'thing' upwards. An old and savvy investor/business man (Senior VP of PPG) told me at the time the Dow would see 10,000 before the 2000. He based this on his belief that the productivity changes he had seen in PPG would effectively continue and dominate the 80-90's and beyond. He believed that American Industry was on the threshhold of a significant boom from the advances in manufacturing and productivity. I don't believe he foresaw the information boom of Microsoft and company. But he did understand economic forces driving american industry. Bob was a good freind of Lee Iacocca of Chrystler...who also understood where automotive productivity was headed. (BTW...he would have disliked the Dalmier deal as businesman and a navel officer...personally I think it will fail - if it ever goes through. Chystler will be for sale in 5 years) Anyway....I don't see anything in these markets that requires selling anything that has a stronge economic foundation and product future. There was a very excellant article in the WSJ 14 May p. A22 by Alan Reynolds on debunking the bubble theories that have become so prevelant of late in the news media. "Let's Burst the 'Bubble' Theory" is the name. With that said....I have a stronge respect and modest awareness of the cyclical nature and wave structures of markets. The current run-up of these market prices doesn't bother me so much as the under-currents that support the validity or fundamentals that drove it. These have not yet changed although I thought in October that SE Asia might do the trick and cetainly Japan's red ink maybe worse then made public. But this should cause no more then a 10-15% pull back from 9200...that is acceptable under longterm positioning....I am not buying anything except oils. However for investors like me....the 'lightening fast' trading in todays markets have altered a lag-time comfort level that use to be built into trading the larger cap stocks. Think of what would happen if FDA found a significant problem with Pfizer's Viagra (maybe it will be shown to produce 'gang-grene'in longtern users) or Microsoft cannot meet earnings because of anti-trust regulators. Part of the 'cognitive dissonance' going on upstairs tells me: "If the fundamental economic conditions remain as they are today and markets remain available for our products this superb growth period can and should continue for another 10+ years giving back 8-10-15% occassionally." It is going to take a substantial event to end this period of growth. Part of all wave theories allow for external events to percipitat the ending of cycles...like wars, etc. So....I follow your assumptions with great seriousness and am thankfull to you and others for taking the time to share and express your theories and knowledge of market anaylisis. I think your suggestion of waiting for the longterm trend to change especially the 200 dma is the direction for longterm investors like me to adhear too.......But we take a risk that another 1987 will swallow our gains in 2 or 3 days. This is what I believe you think will happen..? This is why I feel some conservative structurally sound hedging is important. My next question has to do with derivative exposure and potential problem of meeting all the puts out there if your stronge intuitive sense of a coming big kahuna is percipient. Thanks Arik Chip