Staying the Course 10-12-05

Good Morning.

Readers have asked us if we have changed our view in light of the carnage on the screen. The short answer is, NO. Although we are disappointed that the most recent NASDAQ support has failed, we still believe that this bottoming event is still very close at hand.

The stock market needs to find support from the Semiconductor group as well as a strong close to turn the tide. However, trying to figure out what specific catalyst will come to the rescue is an exercise in futility. These events more often materialize in an unexpected lurch that seems more self-fulfilling than anything else. Naturally, the up move will not be sustainable unless other conditions are ripe. As we have discussed recently, it is our belief that the banana is bright yellow and ready to eat. Therefore, we are maintaining our 75% net long exposure to the stock market in anticipation of a near-term bottom.

Each trader needs to examine the beta of their own portfolio to determine their pain threshold through this decline. Our positions are performing relatively well and along with our still healthy cash hoard of 25% is providing significant cushion compared to the overall declines in the averages. Perhaps this is giving us an added feeling of bravery. We feel fortunate that we are properly positioned to make such a stand at this time.

We hope you are experiencing the same and are able to maintain patience.

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