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

To: Bald Man from Mars who wrote (10808)	7/1/1998 5:03:00 PM
From: Roger A. Babb	Read Replies (1) \| Respond to of 18691

BM, I expect the Internet crazies to all crash together, overnight losing half their value. When? I don't know.

To: Bald Man from Mars who wrote (10808)	7/2/1998 2:09:00 AM
From: Marconi	Read Replies (1) \| Respond to of 18691

Hello BMfM: I've been trying to come up with a reasonable agenda for bubble undo. It would seem there must develop a critical mass of sellers that somehow have to strain the selling order acceptance capacity. Two thoughts come to mind which effects would be exaggerated when coupled with 20 minute delay of quote information but not news information. Throughout I think it fair to isolate and treat the internet stocks as the bubble group separate from the equities market. Loss of confidence in a smaller tertiary issue may trigger to the loss of confidence in at least one of the larger issues. The daily volatility could easily be misinterpreted as the start of a decline in another issue. This pulldown process could be graceful by rotating through the smaller fringe bubble stocks, and yet ultimately result in the pulldown of the larger group components. In this scenario, the best one could hope for is for several days forewarning from the lesser caps in the group. Another more pernicious effect though could come through gap openings. A close on volatility could leave an imbalance--which could in part be played by the aftermarket traders. And the morning opening if newsworthy in advance or even if delayed, could be imbalanced and become more so. I suspect 5 points could be handled in an AMZN, but if a gap were to be closer to the extremum of a day's moves, e.g., 15 points with AMZN. That would trigger notice. People really loathe to be locked out of 'protecting' their positions...terminates the joy ride, and now! To my understanding, bubbles are aptly named. They inflate and inflate, but often drop stunningly and precipitously--the pop. I can only hope that thinking about these things leads to recognizing some quality about these bubble stocks that will become obvious to the average trader on their own terms and be so obviously absurd that it will define a limit to it all. Then they can erode away instead of threatening the enormity of the recent price moves, and more. Best regards, m