52 week low in the major airline stocks on the dow... market drops over 800 points in the last 6 trading days... This is happening with a pretty good earnings report just released.. The bond market is on a rally. What does this mean? Glad I'm watching and not playing... :o)

-- roofer@topodehill.net (beef.2000@usa.net), January 25, 2000

Answers

This is happening with a pretty good earnings report just released.

I'm learning mostly but this is one thing I've heard often. Having a market spin downward even with good earnings reports seems to be a negative indicator.

The Dow just slipped below the 10900 level,

Dow down -113 to 10894 at 11:05 pst.

Mike

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-- Mike Taylor (mtdesign3@aolx.com), January 25, 2000.

Stocks down. Bonds down. Oil down. Gold down. Hmmmm. Smells like a liquidity crunch. But don't quote me.

-- Brian McLaughlin (brianm@ims.com), January 25, 2000.

Thanks goodness I've made enough in the last two years staying fully invested to cover a 50% downturn and still be way ahead.

-- ImSo (lame@prepped.com), January 25, 2000.

ImSo,

I doubt that you have. Down percentages hurt more than up percentages help, because they are on larger numbers. Do the math.

-- J (Y2J@home.com), January 25, 2000.

Exactly. By now you would have lost far more than you have made.

-- (daveO@quedfire.net), January 25, 2000.

This is just a 7% correction folks, it's not "tanking" yet. But... if it continues... I'll grab my tinfoil hat and join you.

-- RPGman (tripix@olypen.com), January 25, 2000.

IF ImSo was in .com and IPOs only this could be true. Buy at 15 and hold till 300. If it falls to 150 he is still way ahead.

-- Possible Impact (posim@hotmail.com), January 25, 2000.

Silly to argue My holdings; anyone can lie on the web. But I only buy tech stocks, usually on the NasdaQ, and Nasdaq overall up 86% last year ALONE.

Here's the math for last year (alone).

$100 with an 86% gain is $186. For that SINGLE year of investment, that stock could go down 40% and you would not be behind. Add the prior year plus last year's 86% on the prior year's gain.

Pointless to get into an argument I know, and I know this market is VERY volatile, and I know I might lose a lot of money. What I'm telling you is true, though, and I have been lucky enough to beat the Nasdaq average significantly. I am ONLY ahead because the market has been so upside and I have stayed invested. Over the long run this beats trying to time the market, and those who were too nervous to stay in have lost a lot of gains. The comeuppance for those of us still in the market will not hurt as much as it would if we were only getting in now. I personally would not put new money in some of the stocks that are overvalued.

-- ImSo (lame@prepped.com), January 25, 2000.

ImSo,

You have invested well. Your point is well taken. I would still question if you would be "way ahead" if the market retraced 50% from here. Ahead, yes, but "way ahead" might be stretching it.

The basic argument boils down to staying invested no matter how high valuations get versus using some type of quantitative method to get in and out of stocks. The argument for staying invested at all times has been the right one since the early '80s, but it took until 1954 to get back to even from the 1929 top, and the DOW didn't break away from the 1000 mark for good(hopefully) until 1982 or 1983, after having first touched 1000 in 1968. I disagree wholeheartedly with just blindly holding onto stocks no matter how expensive they are. Stocks are a means to an end(more money), not the end themselves.

-- J (Y2J@home.com), January 25, 2000.

J,

Well said, and I realize this forum is not supposed to be investing 101. I was trying to make the point that those who pulled out of the market two years ago BECAUSE of Y2K fears lost a substantial gain, and that a loss now does not hurt as much if you have stayed invested. This being a Y2K forum, THAT was the point I was trying to make. There may be other reasons to have pulled out of the market or out of a particular stock.

As for holding stocks forever--I only hold all stocks until I'm too nervous, and then I sell them. For example, I bought AFCI fall of '98 at 7, and sold at 16...it's around 40 now (sob). I bought Flycast at 35 and dumped it at 27; it was recently well over 100... I doubled my money in AOL and sold; it has tripled since I sold...

Currently I hold fairly large (for me) stakes in Newbridge Networks (in at 17) and HIFN (in at 50 after the recent crash), so those of you who want to ridicule me later know where my money is this quarter (although I will probably have to pretend I sold them to save face if they tank). I never buy dot coms (well, except Flycast) although I put a couple hundred thousand in a startup private placement that is hoping to BECOME a dot com next year. If the dot com craze continues it will be money well spent; if it craps out I will be pretending "it's only money" while I kick myself.

Ah well; my wife still has some BPAmoco, and oil prices are rising.

Regards

-- I'mSo (lame@prepped.com), January 25, 2000.

I'mSo,

It is good to see that you have the good sense to sell, even if some of those sells are currently "wrong". I wish you continued success in your investment endeavors.

You make a very good point as far as this being a Y2K forum, and as such, your advice being aimed at those who pulled $ from the market due to Y2K concerns. That wasn't my angle of thinking, as I have seen this market as incredibly expensive long before I had heard about Y2K.

In any market, there are good buys and bad buys. In my opinion, most investors who are in this market via mutual funds only, or worse yet, in .com stocks only, are taking an inordinate amount of risk relative to the return they are seeking. You have confirmed my point, in that, HIFN is a much better value at $50 than at $151 3/4, where it peaked.

-- J (Y2J@home.com), January 25, 2000.

You beat the averages on the way up and you could beat the averages going down. Kind of like a card game you never know how well you did untill you cash out of the game. I am envious and glad for you at the same time. Hope you do well in the future.

-- Gambler (scotanna@arosnet.com), January 25, 2000.

People just do not understand the meaning of the word bubble. The world is full of people who invested two years ago when the market was even then over valued. If everyone could get out upon a crash, then it would not have been a bubble. If everyone could escape with what they put in, then it there would be no recessions.

Finally, if one is interested in getting out only what they put in, then there is no grounds for discussion. If one is interested in keeping the winnings, then there is room for debate.

Those who stayed in over the CDC should not boast. They gambled on a risky game and won through no consideration of merit. Those who got out did not lose, they were simply more risk averse. There is room for both in the game of perfect markets, and a winner today may quickly become a loser tomorrow.

Sincerely,

-- Uhhmmm... (JFCP81A@aol.com), January 25, 2000.

Uhhmmm...

I agree about the bubble. I agree about the risk. As to not worrying about the date change, well; that is the central theme on this forum isn't it? I argued then (with my wallet) that the market would be unaffected one way or the other by the rolloverThere are excellent reasons to not buy overpriced stocks. Y2K is not,and was never,among them, IMO.

-- ImSo (lame@prepped.com), January 26, 2000.