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Non-Tech : Invest / LTD -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (4640)	10/25/1998 1:02:00 PM
From: Alias Shrugged	Read Replies (1) \| Respond to of 14427

Lt, Doc, Thean, Pappy, Sheila, DH, et al Still think this is one of the best threads on SI (no thanks to me!<g>) So what am I playing now and how? Played both puts and calls on same stock(s) through July and August. Made good money. Same strategy in Sept - same good money. October, I stopped hedging the upside and paid the price. Am now back to hedging. As the recession unfolds, many of the large cap stocks will see much lower prices - I agree 100% with LT. WMT - doing a triple top thing. On the upside, I have 1500 shares long, 10 Nov 70 calls, short 10 Nov 65 puts. Downside - long 10 Nov 70 and Nov 60 puts and short 10 Jan 30 calls. I have been buying and selling the stock to swing the bias from up to down and back. I want to ride this thing up wherever the institutions want to take it and then jump off by selling the stock. Last week, went home most days with no stock. Friday, I held the 1500 shares as the stock was strong into the close. I have an itchy trigger finger on this one. IBM - (this will not be pretty). Shorted 100 at 124, and another 100 at 130, and the final 100 at 141. Friday, the damn thing still was running strong (even though seems to be putting in a top), so I bit the bullet and covered my short at 143 (double ughh!). I still want to play this one. IBM will see 90s or 80s or even 70s in 1999 - I want to ride that 50 - 60 point downdraft, but not get eaten alive by da bulls. IBM is tougher to play as the stock is price too high. Buying/shorting 1000 shares is mucho bucks to me, and i can play only so many at once. I want to have my short position in place ready to be "uncovered" at a moments notice and in the easiest fashion possible. Trying to short as the price drops or trying to buy puts as the suckers crank up the premiums is not for me. So, I get net short simply by selling stock. What is everyone doing with IRA money where its tougher to play short or to do serious hedging? I have some gold, some country CEFs and lots of cash. Are folks just scalping to the upside? DH - re market and economy. Major damage has been done to the global financial structure. Not only have bondholders (ex US Treas) gotten crushed (foreign debt, junk bonds, collateralized obligations), but the brokerages and investment banks have gotten stuck with lots of this crap. Who will buy this stuff. What will convince people to return to these high-risk investments?? AG dropping rates? I don't think so. What will convince the brokerages and bankers to expose themselves to more risks by trading or making markets or bringing more of this stuff to the market? Put yourself in Lehman's position. You've already had one of your legs chewed off by the market - are you going to hop (good pun, eh?) back in or hang back and lick your wounds? IMO, they go back in if the asia/russia/latam situation shows improvement (note: this is not the same as things not getting worse) and future investments show promise of paying off and investor confidence increases to the point where these risky investments look reasonable (oh yeah, I'll buy some Russian T-bills!!) Given the overcapacity issue and lack of demand from 1/3 to 1/2 of world, things will not improve prior to getting worse. Now, the equity markets seem to be operating on a different cycle. They lag events in the real world and the debt markets. Sentiment can also reverse to the upside (as it has) without any real signs of improvement. That is not happening in the debt market - spr4eads are still pretty wide. We will head down soon and I will be onboard - in the meantime, I'm going to stop these guys from eating my lunch. OK, done babbling. Have a great weekend. Mike