Hard to believe the DOW is still hanging in there. I think people will go status quo till the bitter end. I would have thought a correction would take place by now. Maybe Infomagic or Gary North might respond and tell us what they think...on the other hand...they're probably at their retreats...learning to grow butter-beans....

-- rick shade (Rickoshade@aol.com), April 12, 1999

Answers

I invested $900 in a Wallmart Call Option on Thursday April 1. Today it was worth ove $1450. If I had just bought the stock, I would have made just a few dollars. Options is the way to go. When there is a small move in a stock, there is a magnified movement in the option of that stock!

Bernie Schaeffer has an Option website that has a free Options training course. He can also be found at www.OptionAdvisor.com

I also have several Put Options in place that expire in Jan.2000 for when the Market crashes. I will make a bundle then.

-- smitty (smitty@sandiego.com), April 13, 1999.

I had a few good answers back in February about the market, including one from Mr. Yourdon... <:)=

Stock market waves, Y2K related?

-- Sysman (y2kboard@yahoo.com), April 13, 1999.

What you're seeing is a full blown mania in progress. This is the one you'll be able to tell your grandkids about. Worse than 1929, you have to go all the way back to Tulip Mania in Holland in the late 1600s to find something similar (interesting note: the crash following tulip mania ushered in a 68 year bear market - the longest bear market of this century lasted "just" 14 years)

Why the mania? Stocks have changed as an investment vehicle in the last 10 years. Stocks used to represent a opportunity for steady growth and income (remember dividends? haven't seen any in a while). Recently the trend is to look at stocks, not based on the underlying value of the company for the long term, but rather based the probability that the value of the stock itself will go up. This is pure speculation and has turned the main stock market into something like the futures market.

Institutional investors and small investors have bought the line of the past 10 years to "buy and hold" or "buy on the dips." Funny, you never heard the phrase "buy and hold" before 1985. Every time the market goes down, there's still enough money out there to cause a new round of buying to further prop up the house of cards. But it's not a healthy type of buying. It's financed mostly through debt and derivatives.

Will it come down? Eventually, when fear overcomes the greed. Options and futures are a way to make a lot of money quickly, but approach with extreme caution - you can lose your shirt and a lot more.

-- rob minor (rbminor@hotmail.com), April 13, 1999.

rob -- right on!
all -- October is as good a time for a crash as any -- frequently there have been dives during that month. Of course, it could happen earlier or later. :-)

-- A (A@AisA.com), April 13, 1999.

"(remember dividends?" ROTFLMAO! Rob you have the nail on the head.

If anybody wants a real quick lesson, before it is too late, read the book, Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay, first published in 1841. It is available from http://www.loompanics.com for a bargain basement price considering what you can learn from it.

-- Ken Seger (kenseger@earthlink.net), April 13, 1999.

Rob,

Yes, you can lose with both options and futures, but I wouldn't put them together in the "you can lose your shirt and a whole lot more" category. With options, your loss is limited to the amount you invested; not a happy thought, unless you (foolishly) invest more than you can afford to lose. With futures, on the other hand, you can lose (a whole lot) more than you invested. I quickly lost interest in investing in futures when my former next-door-neighbor gave his son (an MBA grad) a graduation present of a $25,000 futures account, and the son lost the whole thing inside of a week.

-- Don (whytocay@hotmail.com), April 13, 1999.

The DOW stocks (and some other stocks) rise because there is lots of money out there looking for a place to go. Lots and lots of people doing retirement planning with stock investments. Not too hard to understand. So folks spend the money on buying a tiny fraction of a public corporation, without any care whether the company produces enough to warrent the prices.

Good idea? Who knows? As a matter of wisdom, Y2K disaster or not, would be to have one's assets in a variety of objects.

*straw

-- straw berry (strawberry9@worldnet.att.net), April 13, 1999.

The worst mistake I've ever made, dipping my little oar into the stock market the past twenty years, is listening to Gary North. Last fall I discovered Y2K and Gary North at the same time. At first his was the only site I found that covered everything. I read, got scared, and sold my Wal Mart stock I'd had for five years. Of course, since then it has done nothing but go up, up, up. It is now $35.00 a share higher than I sold.

My husband didn't sell any of his stock except Dell Global which wasn't doing so hot anyway, and he's had the satisfaction of gloating weekly watching them rise. A pox on Gary North. Yes, I made good money anyway, but I should have known better. The day he predicts something accurately about the market and it's is even close to his prediction, then I'll believe it.

Of course, if my husband takes an elevator ride, I'll have the last laugh.

-- gilda jessie (jess@listbot.com), April 13, 1999.

According to one market analyst that I read, the current up market is partly being driven by the IRA crowd. They have until April 15 to make their contributions for the 1998 year allowances. He feels that after April 15 that inflow will stop and there will begin a downward trend for months. We'll see.

-- Whetherman (whetherman@storm.warning), April 13, 1999.

Gilda, don't spend too much time feeling sorry for yourself. I think it was Rothchilds who said that his family made all its money by selling too early.

-- Puddintame (achillesg@hotmail.com), April 13, 1999.

The market keeps rising because of all of the 401k money being pumped into it. I know of a couple of people who are contemplating quitting their jobs to become day traders.

IMO, alot of the companies are way overvalued, especially when it pertains to P/E ratios. Some folks say that since we're entering a new paradigm (e-commerce, internet-based services) that this no longer applies. They say that although most of the Internet-based stocks have yet to make a dime, their earnings potential is awesome, and once they start turning a profit and have impressive retained earnings, that the price will REALLY take off...and that those who invested "on the ground floor" will experience a REALLY impressive ROI (return on investment) Hmmm...

I don't know if P/E ratios still apply, but I guess I'm from the old school when it comes to investing. Keep in mind that bears make money, bulls make money in the market...but pigs eventually get slaughtered...

-- Tim (pixmo@pixelquest.com), April 13, 1999.

Tim -

It's fascinating to hear some people explain their approach to investing with absolutely no basis in any economic realities. Comments like "...their earnings potential is awesome, and once they start turning a profit and have impressive retained earnings..." are just so much rationalization. That's just blue sky, when-my-ship-comes-in foolishness.

Few of the "Internet companies" have much chance of competing over the long term, and the shakeout of their stocks will be just as nasty as the collapse of the early PC software and hardware makers back in the early 80's. People bought Ashton-Tate stock and said that it was an absolute can't-miss investment. A-T OWNED their piece of the PC market. Quick now: how many of you can name its flagship product? How many know whatever happened to it? Business fundamentals apply to every company.

Look at Amazon. What "business" are they actually in? Books? CDs? Auctions? If some big entity decides to crush them, all they'll really have to do is start a good old-fashioned price war and undercut Amazon by 10%-15% for about a year. Amazon is simply a very convenient way to search for and buy some fairly low-cost and purely discretionary products. If I can get a book or a CD for less over at my local Wal*Mart, I (and most other consumers) will do so.

And now Wal*Mart (a.k.a. "the Category Killer") is cranking up a Website. In the "physical retail world", they've already damaged Kmart badly, perhaps terminally, and they give Target major headaches when they move in nearby. Think they can't do the same in the "virtual retail world" to some little ol' company in Cascadia? I enjoy doing business with Amazon, but if someone else has the same product and service for less, they'll get my business.

When someone tells you that "the rules have changed", it usually means that they haven't studied the game very well.

And if the economy slows down (say, 4Q this year), all that discretionary spending will fall out of bed. Books? CDs? Gimme a break...

-- Mac (sneak@lurk.hid), April 13, 1999.

Thanks Puddintame, I needed that.

-- gilda jessie (jess@listbot.com), April 13, 1999.

Mac -

I hear ya... ;-)

-- Tim (pixmo@pixelquest.com), April 13, 1999.

Tim -

When I saw your quote about bulls, bears, and pigs, I knew we were kindred spirits. 8-}]

-- Mac (sneak@lurk.hid), April 13, 1999.

Here is something to ponder when one becomes delusional over the propects of an ever rising stock market.

04/13 14:39 LTCM faces eviction over back rent, landlord says

NEW YORK, April 13 (Reuters) - Long-Term Capital Management, the giant hedge fund that was rescued from the brink of collapse last year, faces the possibility of eviction from its suburban Connecticut offices for failing to pay rent, its landlord said on Tuesday.

LTCM, which received $3.6 billion from a group of leading banks because its demise would have been too damaging to global markets, has failed to pay over $2.7 million in back rent since its lease in affluent Greenwich, Conn., began nearly two years ago, Pinnacle Corp., its landlord, said in a statement.

Pinnacle, which has been in bankruptcy because of a lack of rental income, said it filed a complaint in nearby Norwalk, Conn., to evict the fund, whose profits have risen more than 20 percent since its bailout last September.

News of LTCM's potential eviction first surfaced in the weekly magazine Newsweek, which said LTCM refused to pay rent until a water leak in the building's basement was fixed.

A spokesman for the hedge fund, which invests on behalf of wealthy clients, said of the complaint: "This move is a desperate stunt by the debtor's newly-retained counsel to further delay a five-year old case and avoid foreclosure."

In 1995, Pinnacle put the building LTCM now rents into bankruptcy. When LTCM moved in, it bought the property's mortgage and signed a lease that said it would not pay rent until certain structural problems in the basement were fixed.

LTCM said it would comply with the terms of the lease when the necessary repairs were completed.

Pinnacle, for its part, said it planned to emerge from bankruptcy as soon as possible, evict LTCM and put a paying tenant in its place. It said it planned to carry on with litigation against LTCM.

"It's completely astonishing to me that Long-Term Capital could suggest that it can occupy the entirety of a company's premises, actually sublease a portion of it and not pay a penny in rent to the landlord," Marc Kasowitz, founder and senior partner of Pinnacle's counsel, Kasowitz, Benson, Torres & Friedman, said in a statement.

In the eviction complaint filed in the Superior Court in Norwalk, Pinnacle said LTCM spent $4.4 million furnishing its Greenwich offices while not paying rent.

The fund, which makes profits by taking advantage of minute discrepancies in bond prices, was hit hard when last year's emerging market turmoil caused investors to buy safer U.S. Treasuries and sell other securities, distorting bond prices.

===============================================

BTW, the book Ken Seger suggested reading is an excellent selection. The various bubbles discussed may have been shorter lived but the END result was always the same

Ray

-- Ray (ray@totacc.com), April 13, 1999.

This is the closest I've seen analysts come to declaring Y2K a potential problem:

And how does one prepare for an ?!? Economic Snowstorm?!?

From the Philadelphia Inquirer.

-- Lisa (lisa@work.now), April 13, 1999.

Gilda, I did the same thing with the same results but I don't regret it. Long Term Management almost went down last October and took the Dow with it. Only a miracle move by Greenspan saved it. It all could go down in a day. I sleep better at night and my greed and coveteousness is in a harness. Hindsight is 20/20.

-- BB (peace2u@bellatlantic.net), April 13, 1999.

But LTCM had all those Nobel Prize winning economists and serious Wall Street players in very nice suits. How could they possibly have been wrong? 8-}]

New fave quote, this one from Ed Yardeni:

"Never in human history have so many humans blindly trusted that so many other humans won't screw up."

-- Mac (sneak@lurk.hid), April 13, 1999.

April 13, just took my Roth IRA out lock, stock and barrel. Lady on the phone started to lecture me on penalties when I made it very clear to her I was *painfully* aware of the penalties and reminded her it was MY money. She told me the balance and how much it had gone up (a LOT) and that was a bit hard. It's chugging along making a pretty penny in some moderate to low risk funds. But I bit the bullet and requested liquidation. It's not a WHOLE lot, I'm only 28. But it'll go a long way to finishing up our preps and stashing it away in small bills.

;-)

Hoping the IRS isn't around next April.

-- preparing (preparing@home.com), April 13, 1999.

Ray, the book that Ken rec'd, Extraordinary Popular Delusions and the Madness of Crowds is indeed very cool, but can you believe one wise-ass reader review over at Amazon.com made the following comment, I'm highly indignant:

Add the Y2K mania to the list of madness found in this book.

-- Blue Himalayan (bh@k2.y), April 13, 1999.

The best book to read about the market is J. K. Galbraith's "the Great Crash 1929" (IMHO anyway). Work through the parallels and differences between then and now for yourself, then ask yourself "is it really different this time?" (which they were saying last time!) BTW it's a cheap paperback and easy to read. Worth every penny.

"Extraordinary Popular Delusions" is available free of charge from project Gutenberg at www.gutenberg.org and mirror sites (as are very many out-of- copyright books).

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), April 14, 1999.

second the motion re: Gailbraith's book- fascinating to compare then and now- erie similarities- picked it up for a quarter at the library book sale a while back...... Those who do not learn from the past are condemmed to repeat it(or some such thing...)

Got tulips??

-- anita (hillsidefarm@drbs.com), April 14, 1999.

-- Blue Himalayan, commented:

"Ray, the book that Ken rec'd, Extraordinary Popular Delusions and the Madness of Crowds is indeed very cool, but can you believe one wise-ass reader review over at Amazon.com made the following comment, I'm highly indignant:

Add the Y2K mania to the list of madness found in this book.

Yes, I don't think the individual read the book. If they did they surely did not understand it.

Here is an Excellent read that was published in 1995 by Robert Prechter and titled "At the Crest of the Title Wave. In it he predicted a massive deflation similar to the 1930s but more severe. This was before y2k was a blip on the radar screen.

Ray

-- Ray (ray@totacc.com), April 14, 1999.

Ray and Blue, I commented a few weeks ago that Y2K will definitely make it into the Popular Delusions book (which I have read). The real question is who will it feature. Those who did prepare or those who did not?

-- Puddintame (achillesg@hotmail.com), April 14, 1999.