October 3, 2000

Today's marlet action was extremely bearish and increases the probability of
a very severe and possibly also long-lasting decline in stocks generally. We
don't want to cry the blues but there really are bear markets and they can
go far beyond what seems possible when the decline starts.

Looking at the weekly chart for the NASDAQ 100, it looks as if it could
easily decline by 30 to 50 percent from here. Many, many stocks like MSFT,
DELL and CSCO could decline by 50 pc or more from here even though they have
already come off a big piece. Remember that markets tend to go to extremes
in both directions and we sure had extremes at the top.

Don't buy bonds as they too look more like a short sale than a buy.
Greenspan fears inflation and therefore we should too! Go to money market
for a parking place so you have cash when stocks are really cheap, which
they certainly are not right here.

In sum, it is definitely not too late in our view to sell stocks and thereby
to preserve capital. We are wary of selling short in what could be a hole.
Fascinating to see how tdys big early rally fizzled in the last 2 hours.
That is very bearish action.

Don't make the mistake of thinking your stocks will buck the trend. You
might be lucky but the probabilities are not favorable for making money by
owning stocks when the majority of stocks are going down.

xxx