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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: gbh who wrote (43261)	1/13/1999 6:36:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Gary, Disagree we shall. And do not feel obligated to tell me I'm right in the end. My only quest is to get folks out of this bubble before it bursts, and to make lots of money. <G> The BK is not a necessity for my puts to work. I think it will happen, but that is more of a market play and I don't play the market. I play mostly individual stocks and occasionally, sectors, as I did with the IIX and Xal puts last year. However, I have an opinion, even though I don't play the market per se. My model shows that fair value for the S&P 500 is about 4600. That can change over time, but it has been there for awhile. I believe that just as this mania has blown past fair value on the upside, it will zoom past it on the downside. There are no ceilings on the euphoric side of the bipolar market, and the only floor is 0 on the depressive side. I suspect we will see the Dow in the teens again, as a sort of recoil to the massive overvaluation on the upside. When, who knows? This year looks ripe with eps in big trouble and record high valuations and the economy hurting worldwide. In the meantime, I continue to buy puts on overpriced stocks. For my techniques, read talk.techstocks.com. In this piece I talk about buying calls, but the money management discipline is the same for buying puts. I have had very few quarters where I have had everything expire worthless. I have had many quarters where my long puts were up more than 500%. Since I am betting little to gain a lot, I will always take that tradeoff. Since I have turned negative on the techs, I have had 100% + years in 1995 and 1996 (this includes the cash portion the article mentions), a mediocre mid-20% year in 1997, and 1998 was a return to trend year of about 70% on the 90/10 portfolio. You don't need many Citicorps and Cienas to make a heck of a lot of money in this bubble. I have been using this technique when I could (I couldn't when I was managing mutual funds and other portfolios due to conflict of interest) for a couple of decades, but returns in the decade of the 90s have put the others to shame. It may be the volatility or it may be the fact that I was tentative in the seventies and busy getting rich as a money manager in the 1980s. I know that I missed the crash of 1987 in stock puts, though I did buy bond calls and made good money on them. Will 1999 be my first ever losing year? Possible. But when I look at these bloated prices, I think this may be better than 95 and 96. MB