Today's record breaker for both the Dow Industrials and the Nasdaq was a steam-roller that crushed all shorts. The Bears are in disarray and begging for mercy, but there has been none. Sellers of naked calls look pretty dumb, rivaled only by that lady Bear on Wall Street Week.

This market loves to beat the hell out of smart guys who have a mastery of all the subtle factors that say the market should be in the tank right now. I thoroughly enjoy Jim Grant's commentaries, and he may well be a near genius, but he too has been wrong. This market is a beast that is chewing up all comers, and it is being fed the highest octane fuel - MONEY.

No, you can't fight this market. That said, what do you do if you don't want to pay some of these ridiculous prices? Well, first, you don't try to anticipate the near-term top and then load up with puts. The premiums are too high, and you will probably be too early and your puts will expire worthless. And if you try to short in here, you may get badly squeezed. Let the big boys play those games, and they may well get beat-up themselves if they try these tactics.

I prefer to have a mixed strategy. I will not sell my electric utilities and core holdings like AT&T, even though the latter has gone up a great deal. You know what I think of market timing, which is not very much. I am avoiding momentum stocks as they are too dangerous. I prefer to scout out stocks that are relatively inexpensive compared to their results and prospects. Also, don't be afraid to take selected profits when you think a stock's price fully reflects it's value.

The market has gone up so far so fast, that I think it is particularly vulnerable to a bout of profit taking, as early as tomorrow morning. With the U.S. Senate's impeachment proceedings beginning tomorrow morning, it gives a good excuse for selling on uncertainty. I'll probably take some profits very early tomorrow, and wait a few days before I reinvest those funds. Profit prospects and risk are probably both pretty high now, so we must always be vigilant. In the stock market, the unexpected is always to be expected. Stay tuned.

The Market Pro - January 6, 1999