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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (1399)	8/30/1998 10:03:00 AM
From: Tommaso	Read Replies (1) \| Respond to of 3339

Well, of course you are correct. The blue chips are not beat up. That is why I continue to hold a covered short position against them. When you can buy Dow component stocks at low P/Es and good yields, it is hard to make a better investment. But we are a long way from that. My assumption is that we are still only at the beginning of a bear market that may run for two years--or more, given the huge participation of the public. It is typical of blue chips to hold up for a while during a period when the really frothy things collapse and even disappear forever. Finally even the best stocks get beat down to where they are real bargains. Or so it has happened several times in this century. I am hoping that some of the stocks held as shorts by BEARX will actually go to zero. Some few really astute or lucky people will short a thousand shares of one of the "Internet" stocks at, say $140 and hold the position until the stock goes off the boards. If their broker is still solvent, they will get $140,000. The great thing about BEARX, though, is that you can just buy the fund and not put up the margin to maintain a short position. So you know exactly what the limit of your risk is--at very worst you lose your entire investment. A person who shorts a thousand shares of a stock at $140 could get bankrupted even though in the end the stock went to zero.