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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (9390)	5/31/1998 10:38:00 AM
From: Pancho Villa	Respond to of 18691

Dale and all, This article and all of Barron's this week is highly recommended reading. As for the heavy leverage in the market, the excessive risk taken will not harm any one significantly as long as MR. Cramer et. all are right in that the market will not go down substantially as long as interest rates, inflation creep up substantially (HE IS TALKING LONG BOND OVER 7%!). As you know I differ with this view. I see the significant decline in earnings/earnings expectations coming AS A POWERFUL ENOUGH CATALYST to trigger a correction of 10% or more. THis means THAT someone 100% leveraged into the market would drop by twice the market drop, 50% leverage gets you 1.5X the market drop. Saddly, this would be enough to make plenty of folks jump of buildings. Pancho One more thing margin calls would accelerate the market decline. This is the reverse of a short squeeze longs laugh so much about.