Abby Cohen says, "Convert 5% of Equities to Cash" : LUSENET : TB2K spinoff uncensored : One Thread

I mentioned on another thread the Cohen call to convert a small percentage of holdings to cash, but I think this really deserves a thread of its own.

From Cohen's Call and the CNBC Effect

By James J. Cramer

3/28/00 9:07 AM ET

The CNBC effect will be the way to judge this Abby Joseph Cohen "take something off the table" call. That's the big change in the investment firmament. There was a time when the Goldman Sachs call would be made, it would percolate among Goldman's clients, and then at 2 p.m. the public would possess the call.

Not anymore.

Now the call gets wide credence before the opening. If this call is hammered home repeatedly on CNBC before the market opens, the individual investor, which is the dog, not the tail, as my friend Steve Galbraith has been saying at Sanford Bernstein, will fetch bids and bury them.

This is not like the old days. In the new market, the individual is the marginal buyer or seller and the individual doesn't think about "preserving a quarter" or "window-dressing" or propping up National Gift because that will ensure that he finishes up 20%.

The individual just bolts.

Cohen's call took London from plus 20 to minus 58, and it wasn't even about London. I don't want to underestimate the impact, and I want to stress, again, that pockets of institutional strength might be trading opportunities to lighten up if you haven't already.

It appears that some folks may be easing their way toward the exits. Interesting...

-- DeeEmBee (, March 28, 2000


As of 12:35PM EST: DJIA -.08%, NASDAQ -1.3%, S&P500 -.5%.

Modest declines, all. Who knows, maybe no one will listen even when a SuperBull says to pull back a bit...

-- DeeEmBee (, March 28, 2000.


The Shadow posted on the Prudent Bear Forum that ORCL's earnings will be revised. This will cause MAJOR DAMAGE in the market tomorrow!

-- dinosaur (, March 28, 2000.


Do you have a link?

-- Flash (flash@flash.hq), March 28, 2000.

Look out, Shadow. The internet holds no secrets! (Unfortunately)

-- (cat's@out of.thebag), March 28, 2000.


I see you're back with your little dose of FUD. This is what was posted at the Prudent Bear by your bud Shadow:

Delphic source Posted By: The Shadow Date: Tuesday, 3/28/0, at 8:00 p.m.

will state how earnings are going to be revised. In keeping with similar recent revisions ala MSTR. Will be on three feet. Tomorrow

From this you are now predicting a major market problem? You are such a putz.

-- Jim Cooke (, March 29, 2000.

Jim-- Do you think that the markets will hold at appx. current levels??? or continue to climb at 15-20% per year indefinitely? I've heard that currently valuations have discounted earning increases into the hereafter! Can we really go to Dow 34,000??? I wanna believe, but when does this merry-go-round slow down or stop?

-- Continuing (, March 29, 2000.

Commentary from re the newly-crowned "queen of Wall Street": Greensp an, Schmeenspan; Abby Cohen's Words Move Markets More

..."When the No. 1 strategist takes money out of stocks, it makes a statement," observed another Wall Street strategist. "But if she was turning negative on the market, she wouldn't be overweighting financials."

Cohen also maintained her year-end target for the S&P 500 at 1575. Meanwhile, the rival strategist observed her reallocation was "well planned," in that it was issued during the final week of the quarter. The effect of window dressing minimized the impact of the call, he argued.

No doubt that pleased her majesty, err Cohen.

In Good Company

Along with "buy the dips," one of the most accurate cliches in recent years has been "don't short a dull market." About 950,000 shares traded on the Big Board on Tuesday and less than 1.5 billion in over-the-counter action. That's huge by historical standards but (again) pretty boring compared with recent activity.

Yet Cohen is far from alone in thinking the short term could be dicey for the market's leadership (technology stocks, that is). And I'm not talking about the steadfast bears.

"High-tech stocks are tired," said Tony Dwyer, chief market strategist at Kirlin Holdings in New York. "The fundamentals are great, but stock prices are already reflecting what the fundamentals are saying."

The psychology of the market is a fear of losing the wealth that's been created, he said, rather than a fear of missing an opportunity or losing money outright.

It sounds a bit counterintuitive, but Dwyer argued the fear of losing wealth is "much more dramatic" than the fear of actually losing money. That's because it's harder to go back to eating peanut butter and jelly after you've gotten used to filet mignon, he said (making no mention about whether the crusts were cut off the PB&J or how the filet was cooked).

Eschewing the gastronomic allusions, Paul Rabbitt, president at in Hermosa Beach, Calif., reached a similar conclusion about tech stocks as Dwyer did (and, by inference, Cohen).

"I think this market is ripe for a severe correction," Rabbit said, suggesting the Comp has about 5% upside and 15% downside risk in the next 90 days. "We're about as overbought as I've ever seen," based on the number of stocks trading 200% -- or more -- above their 200-day moving averages.

That kind of extension by literally hundreds of stocks is unheard of, he said, suggesting those names are the most likely to be sold in a correction...

And many of them were bought on margin, which has a nasty tendency to magnify declines as the margin calls go out, stock sales are forced no matter the price, and sellers also have to get their hands on additional cash to cover shortfalls. Good stocks get sold right along with the dogs.

-- DeeEmBee (, March 29, 2000.

Julian Robertson shuts down one of the best value funds in the past 20 years, citing an inability to succeed in a market where fundamentals do not matter. Mark Mobius (tech investment maven extraordinaire) says that some tech stocks may be as much as 90% over-valued. Abby Cohen says what she said...

And the bleeding on the Nasdaq continued today. Fell 3%, tried to rally, and then the selling began in earnest. Chart for the COMP today after 11AM EST looks like a boulder falling off a cliff: bouncing occasionally, but mostly dropping almost straight down. Margin calls going out. Not pretty at all...

-- DeeEmBee (, March 30, 2000.

Continuing -

I'd say the merry-go-round has thrown a rod and is spinning off its axis. Let's have a look at the Nasdaq (aka the "Nazzdog" on many investment discussion boards - Lo, how the mighty are fallen...). Assuming that I get the HTML tag correct, here's the 5 day chart for the COMP:

Tries to bounce every morning and at least once every session, but by the end of the day, selling pressures take it down. Margins calls hit full force around 2PM; that's when the trading firms really start forcing selling, in order to ensure that they get their money by close of business. Watch the wave today. If the COMP can't stay above water up to 2PM, it's gonna be ugly. Again.

Prudential analysts beat the crap out of B2B firms this morning. Geez, isn't there some rule about piling on?

-- DeeEmBee (, March 31, 2000.

One more try, then I'll just go away and do some serious review of HTML syntax:

-- DeeEmBee (, March 31, 2000.

Dang. Nasdaq is currently down more than 5% and we're still an hour away from the 2PM start for margin calls. Looks like Friday was nothing more than end-of-quarter window dressing and the new money isn't jumping into tech at all. Some folks are really gonna get hurt as this "flight to earnings" picks up momentum.

-- DeeEmBee (, April 03, 2000.

Ouch! Nazcomp down 349 at the close, a 7.6 percent drop. Blood on the streets. 'Course the Dow zoomed, so someone's making bucks. Can the Naz keep dropping or is this a one-shot explosion over the Microsoft situation? And if the decline continues, who doesn't think the Dow will have to follow? Interesting times. Tuesday has to show a strong up or it'll be the devil to pay.

-- Cash (, April 03, 2000.

Nazzdog smashed through support at 4400 and then didn't hold anywhere near its recent low of 4291 - both signs of serious weakness. Next major support level is around 3900 (representing 50% retrace of that big upmove which started last October.) Another bad omen: recent IPOs are breaking their initial prices rather than jumping, indicating that all those "first day pop" buyers just aren't there anymore.

Man, that was some selling panic from 3PM on, wasn't it? Here I thought the Nazz might just hand back another 1% or so when the margin calls went out in the afternoon, and instead we got a full-on (and lunatic) rotation out of tech and into the "boring old" Dow stocks. Money looking for safety, but it's not stable at all. Weird sort of stampede behavior as all the current players try to make the right "next move".

I hope everyone reading this took some off the table on the way up, 'cause it looks like the days of wine and roses on the Nazz are about to give way to far more sobering events.

-- DeeEmBee (, April 03, 2000.

Well, that was quick, wasn't it? Went through that 3900 level like a rock through tissue paper. Next stop is essentially unknown, as it appears that margin calls went out yesterday and all the high-flyers who leveraged themselves to chase the Dot-Coms are now being forced (yes, forced) to sell to cover the loans. That creates significant downside momentum, thus eliminating some of the standard support calculations. When lots of people HAVE TO sell, prices fall out of bed. Not a pretty sight...

-- DeeEmBee (, April 04, 2000.

Trading collars went in around 1PM (10% drop), causing all sell programs to be turned off (only buying is allowed) and stemming the bleeding. That lasts 1 hour under current rules, so the afternoon session will tell the tale.

Big question: were the majority of margin sellers forced out this morning, or will we see another wave from 2:30PM to close-of-business?

-- DeeEmBee (, April 04, 2000.

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