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To: Lizzie Tudor who wrote (86536)	12/22/1998 3:20:00 AM
From: nihil	Read Replies (2) \| Respond to of 176387

re: January effect Michelle, many people have been complaining about the Fed creating scads of money -- but don't believe it. The increase in the narrowest definition of money M1 is quite modest over the past two years -- 2% to 3% a year. The big increase in in Money Market funds, both public and institutional making M2 and M3 increase -- but these are interest paying "money" for the most part and have increased even though the top stocks (nifty 50) were booming. Now most stocks and commodities are depressed and only a few -- mostly the big Techs and internuts are making new highs (thats why overall volume is often modest, while the the Big Techs make huge gains.) Prices of goods and service grow slowly because most the increase in money supply is locked up. There are hundreds of underpriced stocks waiting to be bought, there is money galore, and all that is needed is a spark to set off a boom, but there isn't any. The techs are going too fast and too far. All it takes is for one or two to stumble badly, or for people to recognize that the internuts are overpriced by 4X and the game is over for a while. This is a metastable system and can't last very much longer. The expressions of wonder and astonishment of the people on the tech threads is a good warning of the lack of support for these recent price increases. We can't believe that our luck will hold. It can't. I just read the Fool poll on Cisco, and 57 per cent of the respondents that the bull case was the only strong one. Irrational exuberance. The next time the NASDAQ goes down it may not come back so fast. I don't expect a sharp top (quick reversal) on the techs, but profit taking will start soon. Most people don't want to pay more income taxes this year, so will hold as long as they can. But watch out for January. I'll put in -5% trailing stops on about half of my shares in each stock and adjust them daily or sooner sell at-the-money January calls on the other half initially on the IRAs in December, and then in January for the taxable accounts. I don't have all that much money in a dozen NASDAQ stocks, but I will buy longer higher strike puts to cover all of my short in-the money mostly Jan puts. I will take profits on yr 2000 leaps calls and leaps call and put spreads and hold the yr 2001 options. I hope NASDAQ and my typing holds up that long. If NASDAQ goes down, I'll be stopped out of half my stock , but gain the call premiums on half. I'll also be put stock at below current market prices from my naked out-of-the money (inq) puts, restoring my positions at a substantial saving (considering the short put premiums earned.) If the market goes up, I'll have some cash to buy whatever looks good, but I am bearish for the rest of the winter and the spring. I'll think about the pension plan index and growth funds next year.