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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: lin luo who wrote (2480)	4/22/1999 11:23:00 PM
From: lin luo	Read Replies (1) \| Respond to of 2578

What could have happened if Merrill etc. & Greenspan had not saved LTCM last summer? The drop of Nasdaq early this week seems scary to many people. I have looked some charts of major stocks, they all have a vertical line. I was chickened out at one moment and only bought PFE and sold some puts of DELL as I planned. I knew, hopefully, the market is just fine. The only moment that really scared me was last summer when LTCM claimed the loss of $4 bln. The market charts were well in position to head down. It is the worst bear market in a decade. Charts were not the only thing I was fear of. I have not seen any estimates for what could have happened. At that time, I could only estimate based on my experience. In 1994, my clients lost $55 mln in LME copper spread and commodity tradings. This was about 10% that China lost in that year ($600 mln for the country). Let me assume those big traders have a lot in common. One particular trade was 2000 contracts of LME spread which lost $5 mln. These contracts were equivalent to 4000 contracts COMEX contracts which were about 400,000 shares of major company, such MSFT or DELL, common stocks. LTCM lost 4 bln. This was about 800 times of 400,000 shares or 300 mln shares. That is if they were forced to dump to meet margin calls, they had to sell/buy 300 mln stocks, such as MSFT's or DELL's, at the same time at the market. Of course, they were mainly in bonds and other derivatives. Other houses like D.E Shaw had the same problems. It is just nobody knows what happens if you are not really involved. I think I was the very few who fooled themselves by doing analysis like this at that time. By the way, I was good at saving my clients. People have fate.

To: lin luo who wrote (2480)	4/24/1999 11:10:00 PM
From: lin luo	Read Replies (3) \| Respond to of 2578

About the technical analysis. When I first came to this country, a lot of new friends including some world-class professors wanted me to believe God. Since I did not believe anything in the past, I asked many questions why I should. Most of the answers could not convince me and hence made me more disbelief about the existence of God. One day I went to lunch with a fellow student and he told me the reasons: there were a lot of people who did not understand the issue and tried to give the false answers based on their understandings. He answered my questions and from that day I am convinced that I could believe God. I was sent to CBOT one day for learning to trade the commodity futures (I could stay longer and learn more, but I had family problems and went back right away). On the floor people showed me how and when to buy/sell based on the previous prices. My question naturally went to what if there was a breaking news or something, and they told me they would give it up if that happened. Is the time when large sigma events happen, people really make / lose money? The people I met were not some small floor traders, but... Serveral times I went to see a famous technican because my clients forced me to. He was famous in Elliot Wave theory with 35 years of experience of consulting large clients. However, he was just a high school graduate. For me equipped with knowledge of the modern science and technology (I think I did my thesis on the stability and relibility of large dynamic systems research), I was curious what he could tell me that I did not know. Through our conversions he made very clear to me that most of the financial markets are very persistent on different time scales. This is totally different from what are assumed by these nerds from those business schools. However, when he demonstrated to me how to count the waves or read the charts, he put his feet in his month. I knew he mixed up with the time scales and large sigma events. This was because the tools he used and his understanding of the underlying dynamic were too simplicity. What I learned is that almost everything is in the charts, and no more than three factors determining the markets. Technical analysis sometimes can be used, but all these associated with statistical stuff and moving average are garbage. The markets are more persistent than the normal noise which means on most of time scales if you see something going up, it is more likely will go up again. Like I explained before I just can't put all these things together. People might be curious just how big the clients were. The desk next to me handled 10% of US energy trading. About the my religion, I have to ask what is religion? Is that something I believe or study hard? Then my religion is science and technology. :-)