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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (2890)	1/20/1999 4:19:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

MGJ: "So what is your equity, bond/cash ratio if I may ask?" When I last posted on this topic, I was 25% hedged with the rest in equities. Those hedges proved mostly fruitless and I made up for lost profits there by going for small cap tax loss shake and bake trades from the end of the year to the end of the first week of January. UTEK was nice. So I began to sell some more in the first week to go for an 80%/20% cash mix. Bonds are not a part of my plan for the coming year. But a funny thing happened on my way there. There was a liquidity surge in my semiconductor capital equipment portfolio for two days. I let the first day run because the stocks closed near the highs. The second day the same thing happened but closed off the highs. So I sold some when we retested those highs. In those two days, my portfolio was up 20%. That has been the trend for me since then which has caused me to continue selling because everyday my position goes out of line with my goal as my stocks go up in price and my cash sits there at a constant. So everyday I wake up and ask myself what to sell that day. I try to be rational and sell those things that are overvalued but there is so much to choose from!! Selling in a rising market is just as hard, if not harder, than buying in a declining market. You inevitably leave money on the table. But we have to thank Alan for that. By increasing the liquidity to the economy, he has caused an inherent volatility in our market. At least it is to the upside for now. Here is the law of unintended consequences at work. I think I am almost there to my mix goal. I will be there and more by default as my cash remains at a constant and my portfolio declines in value in a correction! Here is Greenshades today: "Thus, all else equal, a flattening of stock prices would likely slow the growth of spending, and a decline in equity values, especially a severe one, could lead to a considerable weakening of consumer demand. Some moderation in economic growth, however, might be required to sustain the expansion." Greenshades is caught between Brazil and a surging domestic economy and stock market. All he can do is sit on his hands for now because Brazil remains "fragile." But we should all be warned as the good Doctor has a tendency to prepare us in stages for the inevitable. Nowhere did he talk about taking rates down a notch. No hint. He did talk about raising them, although obliquely, in the above quote IMO. The Fed. moderates growth by its only tool: ratcheting up interest rates. Anyone remember 1994?