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If you are only on long, and on margin, pray for luck. If your longs are fully paid for and your shorts are the only ones on margin, you should be a survivor

If you are a Long Term Investor or one with an outlook which exceeds this afternoon, NAKED Shorting or Shorting against the box is as unrewarding a gamble (for almost all investors) as is buying as a top is forming.

In addition to all of the obvious signs, and the smell of fear from those investors around you, down and down and down, etc. is a key part of the formation of a bottom. Relative strength of those remaining strong eps and rev issues in the trashed sectors that took you into the death dance is another key. Blood red screens, huge overbearing dec vs adv, etc. all signs of growing panic, of the vertical part of the huge Tornado (or any similar name) steeplechase, and of the sure knowledge that you are approaching a rest area usually referred to as the bottom. Capitulation is rearing its ugly head. Keep yours focused.

If the decline reminds you of an extended large firefight you actually survived, you're about to get through it if you keep your wits about you and get into the resting area. Everyone gets a wound, a cut, a bruise, but those who do not lose it, get to be able to repair the pain and the damages.

Do not go with the trend (shorting) if you are NOT a professional, a true professional, trading with millions of your money, or hundreds of millions of other people's money. If you're a small long term investor with a couple of hundred thousand in equities, you are as ill equipped to short as you are to set a new deep sea diving record or para-glide from the side of a 12,000 foot mountain.

At this point you want to be researching like crazy, searching for those issues you want to own coming out of this mess. At this point you want to set your head up, your psyche up, to be ready to buy the best issues you can select. DO NOT presume that the last greats are the next greats. Price vs FUTURE fundamentals for the next 2 years (set a target – elections – 11/02 is as good a target as any) because by then this firefight will be a harrowing memory, but still a memory. And, if you select well now, you win. Those who “step out of the box” as the thwack from a hit into that log above your head, who forget their training, their focus, their sight lines, their responsibilities to themselves, their families, their associates end up either lucky or unhappy.

Take clean sheets of paper. Write down the sectors you want to own on 11/7/02. Then write down the issues you think are suitable. Get prepared for the next bull.

If you short that means you have to make two decisions – cover the shorts and then buy the long-term investments. Too much for those not a true professional. Stick with the one that fits you, long-term capital gains from well-researched selections.

Good luck
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