The Dow hit an all-time high yesterday. It even beat the high reached in July, which was right before the worries about Russia and South America took their toll.

The Dow is back up to 9300. Comments? How long do you think it will last?

-- Kevin (mixesmusic@worldnet.att.net), November 24, 1998

Answers

If Alan Greenspan was talking about irrational exuberance at 6000 or so, I wonder what he thinks now. In answer to your question, the law of gravity: what goes up......

It will last until the liquidity (dips buying) dries up. With the P/E in the upper 20's and net stocks at multiples of 3,4,5 Hundred (with very little revenue), many issues at over 5 times book value, and dividend yield at less than 1.5%, the whole house of cards is coming down.

Oh, I forget, there's this other minor annoyance. I think it's called Y2K.

-- Robert Michaels (sonofdust@net.com), November 24, 1998.

Terrific opportunity to go short if you choose your battles wisely.

IMHO

-- Buddy (DC) (buddy@bellatlantic.net), November 24, 1998.

There are a certain kind of stocks you can buy. You make the deal (say) in January, for the June prices. In June, you *have to* buy the stocks at the June prices and IMMEDIATELY sell them to a buyer, who *has to* buy them at the price they cost in January.

In the event of the big crash that we all know is coming, these stocks would be a very good deal. What are they called -negative futures? Options? (Sorry, I don't know anywhere near as much as I'd like to about the stock market). Where do you buy them -through a broker?

And also, does anyone know which stocks are most likely to fall the furthest? I'm hazarding a guess on computer companies, in particular those that specialise in internet software and are currently not making huge profits because of gateway strategy (I'm thinking of Yahoo here).

Any info would be greatly appreciated; thanks ;)

--Leo

-- Leo (leo_champion@hotmail.com), November 24, 1998.

Leo,

That method does has a potential for big gains, and some people have made money that way - and a greater potential for tremendous losses, and many thousand smore have loss "big" doing it.

Not as risky (nor foolish) than putting your savings into the lottery, but very few people make money that way. Those that do also tend to make their brokers rich with the number of commissions each time they sell or buy or sell or buy or .....

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), November 24, 1998.

Hi Leo: Robert's right. Consider the following from "Beating the Street" written by the legendary Peter Lynch:

"Time is on your side when you own shares of superior companies. You can afford to be patient.... Time is against you when you own options".

"does anyone know which stocks are most likely to fall the furthest? "

The ones that have had the most spectacular run-ups. I heard this morning that one of the net stocks (Yahoo I think) has a market cap of about $20 Billion, yet only $150 - $200 million in annual revenue. Doesn't make sense.

Here is some of what Jim Lord had to say in yesterday's 'tip of the week' on the y2ktimebomb site:

"figure out what people need to get ready for Y2K. Then concentrate on how to make a profit giving it to them. Y2K will likely be a time of great opportunity. Not for scaring people into buying junk but for helping people by giving them real solutions."

p.s. anything new with that venture cap we were talking about two weeks ago?

-- Rob Michaels (sonofdust@net.com), November 24, 1998.

Would it be too much trouble if I asked you to explain how exactly "negative options" (?) work? From my (uneducated) point of view, it isn't exactly a huge gamble; all or most stocks are going to go down fast when the recession hits. Therefore, buying shares in the company most likely to fall the furthest, would be a very sound strategy? (Also, I don't think Yahoo is listed on the Sydney stock exchange. Does that make it impossible or just harder for an Australian to buy shares in it?)

As for the company, I've come up against a small brick wall called: No Finance. The two people I was expecting to maybe finance it don't seem all that viable; one of them seems to have lost a LOT of his money when Japan exploded and is now apparently fighting to save his own property, and the other (I should have known, but hadn't realised this) is paying about $400,000 a year of his $600k salary in alimony, child-support, and private-school fees for his 3 kids. And I haven't even done a cost estimate. Guesstimates are $20k-50k for the product, probably closer to $50k. Then there's miscellaneous smaller stuff, which would still require five-figure money. Don't forget the way $AU trades; $1 US could easily buy $1.50 Australian. Anyway, the ball is technically in the air- and if educated, intelligent people -like yourself- think it's a good idea, then I might just have another go at it..

--Leo

-- Leo (leo_champion@hotmail.com), November 25, 1998.

It is your last chance to get out. The heard will turn!

-- Bill (bill@microsoft.com), November 25, 1998.

"buying shares in the company most likely to fall the furthest, would be a very sound strategy? (Also, I don't think Yahoo is listed on the Sydney stock exchange. Does that make it impossible or just harder for an Australian to buy shares in it?) "

Shorting is a sound strategy but also a gamble. Don't use any funds that you can't afford to loose. Here in the States we have something called American Depository Receipts (ADR's) which are investment vehicles that enable us to invest in non-US issues registered on foreign exchanges. If you are inclined to speculate with 'play money', you can get a reputable broker that has a seat on the Sydney exchange and ask them about depository receipts for US issues (like Yahoo). Ask about fee's and commissions. If you don't know where to start, call the exchange itself for information. They should be glad to help. I've not heard of "negative options", perhaps it's a down under term?

As far as the venture cap, I wouldn't do anything risky, especially now with Y2K awareness growing. Re-read what I posted for you from Jim Lord and consider it in this context.

-- Rob Michaels (sonofdust@net.com), November 25, 1998.

Buying stocks and options is very lucrative. The secret is in haveing a really good system and selliing that system to as many people as you can.

-- Roberta Blackard (roblackard@juno.com), November 27, 1998.