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To: Dale Baker who wrote (2499)	1/7/1999 4:04:00 AM
From: Dale Baker	Respond to of 118717

Here we are at #2500, not so long after 2000. Let the good times roll! Certainly the case on Wednesday, and Briefing has an interesting take on the current situation: General Commentary My soon-to-be three year old son is currently obsessing on the Disney movie "Lion King." We watch it over and over again (editing out certain violent scenes). I'm not complaining, sitting through the "Lion King" several times beats the earlier "Barney" and "Blue's Clues" obsessions. And, I am not bring this up for the purpose of boring you with the viewing interests of my son. It's just that in watching the movie earlier tonight I was struck by an eerie sense that the marketplace has become Disneyfied. How else to explain the eye-popping, unprecedented run in the technology sector over the past 3-months, but the simple philosophy of "Hakuna Matata," espoused by Timone and Pumba. As my son Charles would tell you, "Hakuna Matata" means "no worries." Given that the SOX index, Nasdaq 100, and Nasdaq Composite have jumped by 113%, 85% and 71% since their respective October 8 lows, I think it's safe to say the market has adopted the "trouble free philosophy." Nobody worries that valuations are at unmatched heights; no one worries that the President's impeachment trial begins today; no one worries that overall earnings growth has slowed to the low single digits; nobody worries that the number of people laid-off in 1998 was the highest total in 5 years and that more job cuts are in store for 1999; no one worries about the sharp drop in the CRB index (save those of you long copper or gold); and no one worries that the US economy is slowing. And don't give me the old market is climbing a wall of worry nonsense. If investors were worried about these, or any other issues, the percentage of investment advisors bullish wouldn't be 60%, and we wouldn't be seeing billions of dollars pouring into equity funds on a weekly basis. Nope, the only way to explain the one-way activity of the market is that investors have "no worries." Scene from next week. Hey, Abbey Joseph Cohen the DJIA just hit 10,000 what are you going to do? A jubilant AJ Cohen shouts, "I'm going to Disney World!"

To: Dale Baker who wrote (2499)	1/7/1999 4:21:00 AM
From: Dale Baker	Read Replies (2) \| Respond to of 118717

What's hot and what's not: on a percentage basis, today's clear winner was CMGI at 25%. It could go down that much tomorrow, too, but it pays to keep at least one mainstream Internut in your portfolio for days like this. I just a put a stop in back at CMGI's purchase price. Apart from a "no loss" rule I won't try and trade in this mania. Surprisingly, the second place finishers were Tradin' Trash specials ERGO and NRAG up 12 and 22%. Recall that I mentioned yesterday that ERGO needed a big boost to confirm a breakout; I expect more upward movement in the very near future. Remember, ERGO has more than $2 cash per share on hand. Its breakup value is well over 50% above the current share price. NRAG is emerging from tax-loss selling hell as we wait for news from its ongoing ventures. Easy 50% from here and probably a double on the horizon with positive news. Nice gains in WCOM, PLCM, KEA and IFMX. All except PLCM are current market darlings with upgrades all over the place and high volume. Some of the kids refused to come out and play on Wednesday - BRKB, FLYR, FNDTF, KCS, MRCY, NGPSF and XYLN. I am close to stopping out of MRCY with a nice profit. I will hold in hopes that it reverses and heads back toward 30 but won't cancel the stop either. XYLN, on the other hand, is one where I did cancel my stop order. It's a small position unlikely to go below my purchase price of 17 5/8, and the buyout buzz is growing. I don't want to miss 15 - 20 points gain in a buyout just to lock in a 2 1/2 profit days before big news happens. Worst case is I lose a few hundred bucks. I like the risk/reward ratio.

To: Dale Baker who wrote (2499)	1/7/1999 4:36:00 AM
From: Dale Baker	Respond to of 118717

On the short side, FIBR was a real star, falling from my 15 5/8 entry to 13 3/8 at the close. The jig is up and death spiral discount convertible financing will doom yet another crappy company. CCSI, however, is going up in the current wave of exuberance. I shorted at 5 (small position) and have a stop in at 9, which would break the last minor high. CCSI shares will be hard to get again for shorting, but I don't feel like tying up margin by boxing the position. If it's a loss, it's a loss and I move on. Which brings me to a sad story today - I had a PM from a regular SI poster who incurred substantial losses shorting high flying momentum stocks. The loss was enough to impact his family situation. I want to repeat for everyone that shorting can be a dangerous business. If you stay in a losing position it can go against you more than 100%, unlike a long position which can only go to zero. If you are going to play the short side, use the same strategy of stops and profit-taking that you would on the long side. I learned my lesson with PVN last year - take a small loss and move on. The second rule is that no single position (long or short) should ever be large enough to have a serious impact on your financial security. Keep stops on your largest positions and don't let anything get too big. Some people say no position should be more than 10% of your portfolio; with smaller portfolios I think that should be 20%. That's what I have in BRKB and WCOM, now 16% and 19% of my portfolio respectively. Both have trailing stops within 10% of the current share price. In late 1997 I poured much of the year's gains into BNGOW and watched it drift away to nothing. Finished flat in a year where the averages were zooming. Apart from that dumb mistake, I remember my wife saying to me "Just because you are down, don't start taking big chances." That is some of the best advice I ever had about trading. The market is open year round; you will always have another chance to recoup losses or increase your profits. In the last month my portfolio has gone up more than 30%. Life now certainly looks brighter than it did on December 1, but it happened because I stuck to my philosophy, not because I abandoned it. Good trading everyone.