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To: TraderAlan who wrote (5677)	11/8/1998 5:03:00 PM
From: HiSpeed	Read Replies (2) \| Respond to of 12617

Your assumption is that the stock market must stay in a fixed trading range or that it must eventually go back to zero. I do not see that happening. Perhaps this analogy to the economy would be appropriate: some people see the economy as a fixed pie in which for each person to have a slice, someone else must lose part of their share. In that respect, for every winner, there must be a loser. However, what I see is an expanding 'pie' that lets more and more people get larger and larger pieces. If we accept that the economy (and market, too) are always in a LT expansion modes then there need not losers. This is why investing works - the never-ending expansion (a LT uptrend). jmo

To: TraderAlan who wrote (5677)	11/8/1998 7:57:00 PM
From: Paul K	Respond to of 12617

Alan, We may have just had a preview of fund problems in the past few months. The Oct 98 issue of Mutual Funds magazine had an article called "Equity Funds Run Out of Cash" The following are excerpts from the article: "...The Funds have 4% cash on hand (4 cents for every dollar of assets). By historical standards, that's the smallest cash position the mutual fund industry has ever had in 54 years. ...Cash reserves are in the most dangerous territory in over twenty years.... the funds are in no position to meet redemptions without being forced to sell equities from their portfolios... In mid 1972, equity funds held just 4.6% of their assets in cash and equivalents, over the following 2.5 years, the DJA lost nearly half its value, the last great bear market. That cash reserve was the second lowest on record until this year. ...The lowest, a 4.3% liquidity ratio in late 1961 immediately preceded a 35% market decline in just six months. Dearths of liquidity in 1965 and 1976 were also followed by significant market corrections. ... A portfolio manager with only 1% or 2% cash can't handle even a few days of redemptions from shareholders without selling stocks. And if he's forced to sell, he just adds more downside pressure to the market - helping to cook his own goose..." mutualfundsmagazine.com