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Strategies & Market Trends : LastShadow's Position Trading -- Ignore unavailable to you. Want to Upgrade?

To: Tim Luke who wrote (158)	9/2/1998 2:19:00 PM
From: LastShadow	Read Replies (2) \| Respond to of 43080

A few thoughts. The financial markets are worth about $3 trillion. Mutual Funds account for about 80% of the transaction volume on US markets. Fund Managers sell off stock holdings in anticipation of investors wishing to move funds out of stock funds and into fixed, money market or bond funds. By the day of the big drop, individual fund participants requested that $2 billion be moved to non-stock funds. The Fund Managers moved three to four times that amount in anticipation of a greater exodus than occurred. They were wrong, and their actions, in general precipitated and accelerated the drop. Its not terribly surprising that those same fund managers and `experts' are now saying one should reinvest in the stock funds at the substantially better prices. What most people overlook is that the huge influx of dollars into the markets each day is primarily by the proliferation of 401k accounts to most of the US Corporations. A large percentage of them offer matching funds of up to 50% of the employee's investment (to 6-10%), and is limited by law to about $10 grand a year. Its fairly simple math to figure out that even if investing in the markets generates only 5% return, one still has gained a 50% increase from that year's investment just due to the matching amount. So when you hear or read a financial commentary about why someone thinks investors will bail out of the funds, that really isn't going to happen. Only some plans offer the option to move money between fixed and other accounts, and most aren't aware of the daily trends in the market to know what to do or when. If everyone was watching the funds on even a weekly basis, they would have redirected the source or slowed contributions a month ago. I'm not terribly worried about what the masses will do, or even what the daytraders do. For the latter its a question of daily income and principle protection. I am getting annoyed by the fund managers, though. Here is one last thought: The average age of Fidelity's Fund Managers is 28 and has 2+ years of experience. Not that I have anything against youth or new ideas or energy, just some preference for experience when they are playing with my money. lastshadow