To: robert miller who wrote (2942 ) 5/25/1999 5:52:00 PM From: michael r potter Read Replies (1) | Respond to
-OT- After expressing a belief that a change in leadership had just taken place [early April] and that it was not just a flash in the pan, post # 2723 April 28 expressed the opinion that I-Net stocks had just completed a wave 2 recovery and were about to experience a possible wave 3 decline-the most intense portion. This was followed by " As we sweep into May, what will the new month bring? Could be showers [of margin calls]. To be blunt: No time to be strung out on margin in high PE [or no PE] stocks." How has the month unfolded so far? Up until a few days ago, the decline was of the stealth variety with margin calls limited. Mon. and Tue. have caused more severe damage and there will be increased margin calls in the morning. Speculators can move through the stages of euphoria, complacency, concern, fear, and finally panic. I'd say up until this week the emotion of margin investors in the described groups was complacency. With Mon. and Tue. decline, over-exposed speculators are now well into concern with fear showing up at the door. This is when many start thinking of lightening up on a [hoped for ] rally. Unfortunately, the market won't likely accommodate. The odds have increased considerably that liquidation will not occur under benign condidions. The downside momentum has become to powerful, the potential buyers are already in-many on margin. Who will they sell to-who will power the hoped for rally? Most internet/high PE buyers are in no position either financially and soon-emotionally to buy. Three days left in the month. Will they bring the showers of margin calls? Still a chance, but it is of little importance from a timing standpoint. Increasingly it appears, the trap has been sprung and those who have not acted will be the recipient of a painful operation performed by Dr. Market--a walletechtomy. Mike
