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To: Tim Davies who wrote (38905)	5/9/1999 10:22:00 AM
From: Internet Jones	Read Replies (2) \| Respond to of 120523

JERRY, why are you holding CSCO through earnings, instead of selling it the day before? Do you expect a split announcement? What do you think of VTSS here? When will the semis move?

To: Tim Davies who wrote (38905)	5/9/1999 12:13:00 PM
From: Lane Hall-Witt	Respond to of 120523

You make an extremely important point for all of us who work the Nets and other highly speculative sectors -- thank you! The parallel with derivatives is very useful indeed. I'm almost always in the process of reading and re-reading Benjamin Graham (either The Intelligent Investor or Security Analysis), and I'd encourage all of you to invest in these wonderful books and read them with an open mind. They haven't convinced me to limit myself to the value investing he advocated; however, they do push me a great deal as I seek to understand the nature of the marketplace and the risks associated with the trading I do. What Graham refused to acknowledge -- and this was quite reasonable, given that he did much of his theoretical work during and immediately after the Great Depression -- was that we can build effective trading disciplines that are rooted in our understanding of market psychology. To put it bluntly, there are times when psychologists will be much better market players than economists or business analysts. Graham's framework is splendid for times when the market has a "rational" attitude toward fundamental data. But should traders simply wait it out and absorb paper losses when the market is "irrational" and ignores the fundamentals, or should we develop new methodologies to help us through periods of "irrational" behavior? I tend toward the latter because, at certain times, the greater-fool theory is a more reliable trading discipline than fundamental analysis; and it is reliability, above all, that we need from our trading frameworks. But when the last fool loses his last dollar, look out! The key to trading, in my mind, is to recognize the tenor of the times and to employ strict trading disciplines that relentlessly focus our attention on the risks involved in our present-day market environment.