larry,

i read recently that hedge funds now control $1 TRILLION in assets. do you think their active trading style is wreaking havoc on the market?

it seems there is heavy sector rotation with a shorter than normal time-frame. things are moving quickly. do they seem to be moving faster than in the past? more abruptly?

just wondered what your perspective was.

thanx.

-ja

Exactly what I was thinking when I hypothesised that the health care sector might be the next hedge fund play. By the way I did a little checking here in Vegas. Almost every hospital is overbooked. Beds in the corridors from lack of rooms. I wonder if its just because of the pop. growth here in Vegas or a lot of baby boomers needing medical care. No doubt the American lifestyle of high calories and little excercise will help contribute to large health care costs over the next 10-15 years.

Gary

PS
Joe, I know you still love me, even though I appear to have lost all ability to manipulate the markets

Joe,

Oh, I don’t know. I really think the influence of hedge funds has been blown out of proportion. Wealthy people invest in them so the media likes to take pot shots at them. You know, if wealthy people like them there must be something evil going on.

Most hedge funds are pretty conservative. They have to be. If they lose enough, they’re out of business. And many of the managers have their own money in them. Also, they’re not all doing the same things. Like anyone else, they use a wide variety of strategies. Some take big risks, most don’t.

There was rotation out of energy into semiconductors today on light volume. Whether that’s coming from hedge funds or regular mutual funds or some other kind of institutions, I don’t know. It wouldn’t do me any good even if I did know.

If you want to know what I really think is going on, I think this is typical stage 3 topping action. Up one day, down the next. Frequent movement from one sector to another. Kind of a mini-version of what you saw in the first half of 2000.

Larry

By the way, if you want the best indicator of what hedge funds are doing, watch the "non-commercials" (large speculators) in the COT reports. That's the category most of them would fall under. Anything else you hear that they're doing is based purely on rumors.

Larry

larry,

thanx for the reply… i usually ignore all the chatter about program trading, hedge funds, day-traders, etc. i don’t think that anyone of these groups has that much power to manipulate the market - but when i read about the $1 Trillion under mgmt by hedge funds it occurred to me… that’s a ton of money, seems like they could create some market wobble. but you’re right; they aren’t all working together & many of these guys are actually conservative traders so they can stay in business.

i also think you’re right about this being topping action. nobody knows where to put their money but no one’s willing to sell yet. but SELL they will…

and probably sooner rather than later.

-ja