From Monday's lows to today's highs was nothing short of amazing. The market is so hard to figure with its great volatility and great swings in sentiment. Let's see some glaring examples using closing prices:

As quickly as investors were all excited about cyclical issues like Machinery, Metals, and Papers, they suddenly lost interest, and jumped into the old favorites like the High-Tech's, Pharmaceuticals, and Internets.

How do we deal with these great changes in direction? That is always the big question, and is always hard to answer. Clearly, you cannot try to pick market tops, because the market will nearly always make a fool of you. When to get out is always a more difficult decision than when to get in. As the great Jimmy Rogers, the "Investment Biker" has said, "they don't ring a bell" when it's time to get out.

You should never lose sight of the enormous P.E.'s that many of these issues have, while at the same time, investors have generally been punished for getting out too soon. What do we do then? The answer is hedge. We have often said that when in doubt, sell half and keep half. That way, it the stock keeps going up, you're still in, and if it goes down you have taken half your money out. When you have cash, there are always beaten-up issues that offer good value, and should be closely watched for an entry point. Oracle and Compaq are good examples, although beware of getting in too soon in Compaq's case, and a "dead cat bounce" in Oracle's case. My apologies to cats everywhere, but that is a very useful illustration.

Now that we have thoroughly hedged our position like the Oracles of old, and the investment analysts of today, we can only say STAY ALERT and stay tuned.

The Market Pro - April 23, 1999