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

To: Greg Butcher who wrote (8278)	10/8/1998 1:20:00 AM
From: Greg Butcher	Respond to of 42834

Boca Raton, Florida Oct. 7 (Bloomberg) -- One of Wall Street's favorite maxims is that the time to buy stocks is when everyone hates them. Traders gathered for their annual convention think U.S. stocks still may not be hated enough. When assessing the market, the traders -- who buy and sell shares daily looking for quick profits -- fall into two camps. There are short-term bears, who believe stocks have further to fall. And there are those who have given up guessing. ''People are afraid out there,'' said Peter Jenkins, director of global equity trading at Scudder Kemper Investments in New York, which oversees $200 billion. ''No one will commit that we're at a bottom.'' Traders attending the Security Traders Association meeting in Boca Raton, Florida, are rattled by the recent tumult. The benchmark Standard & Poor's 500 Index has fallen 17 percent from its peak in July and the indicator for small and mid-sized companies,the Russell 2000 Index, has lost a third of its value since April. Some see parallels with what happened at the time of the 1987 market crash. Others have sold their personal holdings and sit on a mountain of cash. All are concerned that a market that once followed discernible patterns now seems random and violent. ''It feels like you fell off a cliff,'' said Donna Van Vlack, head trader at Brandywine Asset Management in Wilmington Traders, who skipped the meeting and was interviewed by telephone. ''I think a lot of what is happening is beyond anyone's experience.'' Many traders are dismayed because there are so many unknowns beyond their expertise. Can capitalism succeed in Russia? Will Brazil avoid devaluation of its currency? Will Japan fix its ailing banks? ''I can't say what's going to happen in Russia or Brazil or Japan,'' said Mark Madoff of Bernard L. Madoff Investment Securities, an institutional broker/dealer. ''It's so far out of my hands.'' Others maintain that no matter what happens abroad, the U.S. investor is spooked. Jenkins tells about a recent phone call from his father, who is retired. ''For the first time, my father said 'I'm selling,''' Jenkins said. ''Here's the typical retail investor. And he's selling.'' Jenkins blames some of the recent market decline on the near- collapse of Long-Term Capital Management LP, a so-called hedge fund that took enormous market risks. ''This thing scared the hell out of people,'' Jenkins said. ''How many other hedge funds are in trouble?'' Like 1987 Anthony Adonnino, a floor broker on the New York Stock Exchange for the past two decades, said: ''There's no enthusiasm among customers to buy stocks. And it was the same in 1987.'' On Oct. 19, 1987 the Dow Jones Industrial Average tumbled 508 points, or 22 percent. The biggest decline this year occurred on Aug. 31, when the Dow fell 6 percent. Several traders, such as Tim O'Brien ofGuzman & Co. and Louis Todd Jr. of J.C. Bradford & Co., said they've been sellers of stock on balance in the past year -- because prices were so high they expected a severe decline. That meant both missed out on gains earlier this year, and both are quick to acknowledge that ''market timing'' can be perilous. Other traders, even the bears, said they've left their retirement accounts and mutual funds alone. ''I've been trained to invest for the long-term,'' said Jenkins, who is 40. ''The market won't go down forever. If you get a major change, sentiment can turn very, very quickly.'' Van Vlack said she didn't go to the traders meeting because she figured her time was better spent reading up on foreign affairs and staying close to her trading desk. She expects stocks to fall more, particularly if she's right in her prediction that third-quarter earnings will disappoint investors. ''I think there could be some crazily priced merchandise,'' she said. ''There could be some huge opportunities.'' -------------------------------------------------------------------------------- © Copyright 1998, Bloomberg L.P. All Rights Reserved.