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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (782)	9/7/1998 1:06:00 AM
From: Alan Norton	Read Replies (2) \| Respond to of 15132

Subject: Abby Cohen's Catch 22 Justa, I wasn't going to post these ideas, but since you were brave enough to post your speculations, I'll submit mine in regards to Abby Cohen. Abby appears to be in a catch 22 situation, but I don't think that it has anything to do with the Goldman Sachs IPO scheduled for later this year. If Abby issues a statement of caution or an outright sell signal, she may believe that she could precipitate a market event that would hurt many of the clients that she via Golman Sachs represents. If she issues a statement of optimism or an outright buy signal, she risks watching the market fall along with possible further erosion of her clients portfolios. Given the volatility in the market and the domino like effect of falling foreign currencies, a cautious approach is understandable. That leaves one option, stay the course. Eventually, the market will come back. I may be wrong in this analysis, and I will admit that I very well could be since this is nothing more than mere speculation on my part. Still, I have to wonder if she feels that she has a responsibility to allay investor fears by publicly stating that she is confident in our economy. I am guessing that she is feeling a tremendous amount of pressure to 'do the right thing' - whatever that is. I hope that she is paid well for what she does. For the record, I respect Abby, as I do Bob. Let me tell you a story. Last year, I had invested in a small company with a promising new high-tech product. Those of us at SI who had bought this stock became 'internet' friends. The product failed to sell and the price of the stock began to fall. When the company announced an $8 million preferred stock offering, I determined that things were going to get real ugly for the shareholder. When I finally decided to get out, I felt that I might hurt the other investors and my friends if I said that I was 'out' and my reasons for leaving. I compromised by posting in the clubhouse that I was leaving. The stock eventually fell to $.50, 1/12th of the value when I sold. If I had it to do all over again, I would have made that post to the main thread, because by trying to protect my friends, I ended up being less than true to them. There may be a similar belief by many of the long-term bullish advisors like Abby. If true, I believe that this may be flawed thinking for two reasons. First and foremost, the market will eventually end up where it should. Advisors may have a short term impact on the market, but the market always moves towards fair value. Second, it may be rather foolish for anyone besides Alan Greenspan to think that they have the power to dramatically alter the course of markets. Then again, Abby may be paralyzed to suggest anything at this point other than to stay the course now that we are already down almost 20% on the DOW. Except for my position in Europe which I am considering selling, I have decided to do exactly what Abby is suggesting with the stocks that I own. I will hold and wait. They have already been badly beaten up, and I have no problem sleeping at night. Perhaps my assumptions, opinions and speculation are way off base and my thinking is flawed. There is after all another possibility, that Abby is telling us what her charts and analysis are telling her and that she will be right, and I should carefully consider that as well. In any case, I am certainly not berating Abby for her stance, but perhaps we can give her a break by suggesting that the market will do what the market will do.