Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Joseph G. who wrote (7774)	9/7/1998 2:21:00 PM
From: Ken Brown	Read Replies (1) \| Respond to of 42834

I'm not predicting the future, but most plans allow transfers An anecdotal - and therefore probably meaningless - report. I was at a party yesterday, and not surprisingly, the market was a hot topic. The prevailing attitude was complacency, to my surprise. I'd have thought by now that there was some fear out there (surely there is in my household). But these people were oblivious to the dangers. "The market always goes up in the long run" and "A bear market just means stocks don't go up" were some scary comments I heard. My statement that it was possible, though not necessarily likely, that a bear market could cut 50% off the Dow from its high, was met with disbelief. These are the folks who will NOT move their IRAs and 401Ks until the bottom occurs, when a bear market finally hits (if it hasn't already). Ken

To: Joseph G. who wrote (7774)	9/7/1998 3:19:00 PM
From: Wren	Read Replies (1) \| Respond to of 42834

Joseph G., you are certainly right about the potential reallocation of investment money to bonds or money markets if the market continues to fall. I am less certain that I agree with you on the lack of difference in margin purchasing in the 1920s and options, calls, derivatives today. I am not sure that there is as much risk today to the investor who purchases individual issues compared to the 20s. Isn't there a major difference between purchasing stock on the margin, and the use of options, etc. by individual shareholders? You may lose your entire investment in a call, for example, but you will not have to put up new money as you would have to do with a heavily margined stock. The margin calls in 1929 contributed heavily to the plunge by forcing shareholders to sell, in some cases all the stock they owned, to get cash. This overloaded the market with sell orders. The action that could overload today's market is probably that of mutual fund managers selling to raise cash for redemptions. But don't lot of funds have provisions requiring a waiting period to redeem in the event the mutual fund receives more redemption requests than it can handle. Mutual funds that use derivatives, etc. are certainly more risky, and could cause major loss of capital for those shareholders. What do you think?