Alan Greenspan, the Chairman of the United States Federal Reserve Bank has attempted to influence the stock market and money policy over the past eighteen months by raising interest rates. Neither the increases in the borrowing rate nor his continued comments on the overexuberance (to put it mildly) in the markets have had any effect.

When the lady speaks Not more than ten days ago, it took a lady five minutes to get the attention of Wall Street and it was downhill from there. Abby Joseph Cohen, the chief equity strategist at Goldman Sachs, announced that she was trimming her equity exposure by 5 percent to 65 percent stocks and reducing her clients' exposure to the overvalued technology stocks.

With that, by the end of the day, the NASDAQ Composite Index fell 189.22, its third biggest point decline in history. The deterioration in the market has continued with the greatest trading activity volume in history taking place on both the NASDAQ and the New York Stock Exchange Tuesday, April 4, 2000.

Margin seller activity The margin sellers were out in force as the market value of portfolios that were leveraged fell, in some cases by substantial amounts. (See Margins, mortgages and leveraging, Moneywise, March 25).

With every wave in devaluation of tech stocks, more margin calls went out.

When an investor receives a margin call, he/she has only one day to chip in additional cash to his broker. Investors either unable or unwilling to meet the calls chose to let their investments be sold right from under them.

Investors are hurting As broker-dealers sold off margin accounts to meet calls, those actions helped to drive the prices of the underlying stock lower, which then precipitated another wave of margin calls.

Picture a group of dominoes stacked up; touch one and they all fall. This very heavy volume of margin selling did not happen overnight as the level of margin debt in the stock markets has been at an all time high for several months.

Short-seller interest borrowing has also been increasing steadily.

Short-sellers bet that the stocks that they just borrowed and sold will go down in value. (Another article at another time.) Those investors still cash heavy were cutting their losses and exposure to the "New Economy'' technology stocks and rushing to buy the good Old Economydefensive Blue Chip stocks.

Let's take a look at our mock portfolio Warner-Lambert more than continues to hold its own with a five week gain of 19.85 percent. For the math majors, that translates into an approximately 200 percent annual return. Not bad for a good old Blue chip stock.

Nokia is slipping, probably due to being linked with bad technology news and reports that its earnings will be less than expected, rather than on its own fundamentals.

The Gap this week reported that same store sales have slipped 1 percent from last year. I guess we all are getting sick of the bland look, even though those dancing ads are terrific. Home Depot barely holding its own. Guess people haven't thought yet about the old adage "make do; fix it up; or do without!'' lately.

High flyer Puma Technology rated the most high-flyer of all for 1999, is now in the cellar having lost in five weeks 50 percent of its market value. How many investors had this one in a margin account? Rambus, another tech stock, eagerly sought after the last few months has dropped 35 percent its value. Will these two companies have the capitalisation and reputation to sustain them over the next few months? What is your bet, readers. Besides day-traders and momentum traders, will many investors step in and buy while these tech stocks are cheap? (See Puma evaluation -- March 25).

And no one yet has called or written in to identify the mystery stock, even though it and Warner Lambert are in positive territory, carrying the portfolio.

Local stock additions to the mock portfolio I am still having trouble deciding. Readers, help me out here. If I only pick two of all the companies listed on the Bermuda Stock Exchange, will I lose friends and make foes? Which bank should we consider? The one that has been trying to increase Bermuda exposure by listing on the New York Stock exchange? Will that happen with a change in the 60/40-ownership rule? Should we consider the insurance company that has had its share of legal battles and survived, more than intact, continuing to provide an excellent service to Bermuda? Is that stock undervalued? And worth purchasing? Should we go for safety and invest in a utility company. Utilities are great favorites in many portfolios. They generally pay good dividends and plod along, no surprises. Everyone needs utilities in one from or another.

Make pretend This is after all, a pretend investment portfolio! My husband (and mentor and best friend) pointed out that readers will think that this is a real portfolio and that I recommend they buy these stocks. He is right, to clarify, I don't recommend anything in investment articles.

I prefer to help readers make their own decisions. For the record, I deliberately constructed this portfolio so that readers can experience the reality of stock market action. This is not to say that these investments are good, bad or indifferent, but they are being used as examples.

Read disclaimer below What would you like us to write about? Just let me know I am open to any investment and financial planning suggestions.

Future subjects. How to evaluate and handle some of the risk in investing.

Cross border tax issues, understanding mutual funds.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or any other investments. Readers needing specific assistance should seek professional advice from their financial advisor.

*** Martha Myron CPA CA is a Bermudian, holds a Series 7 NASD license and is a United States federally authorized tax practitioner. She is Programming Chair for the International Association for Financial Planning/Bermuda. Questions regarding this article may be sent to her at 234-0290 or Email: mpmyron Y northrock.bm CHARTCompany Account Interest Deposit Fees Type Rate BANK OF BERMUDA Bda$ Passbook 2.50% p/a $100 min Note 1 Savings US$ Passbook 2.25% p/a $100 min Note 1 Savings Cda$ Passbook 1.75% p/a $100 min Note 1 Savings UK Passbook 2.25% p/a $100 min Note 2 Savings Bda$ Statement 4.25% p/a $100 min Savings US$ Statement 3.50% p/a $100 min Savings Bda$ Chequing 0% $100 to open Note 3 Bda$ Seniors Chequing 0% n/a Note 4 BUTTERFIELD BdaUS$ Strata Savings 4% p/q Up to $25,000 n/a BdaUS$ Strata Savings 4.50% p/q Over $25,000 n/a BdaUSCda$ Passbook 2.25% p/q any balance n/a Savings Bda$ Chequing 0% n/a n/a BERMUDA HOME Bd$ Demand 4.25% p/q $50 minimum n/a US$ Demand 3.50% p/q $500 minimum n/a CAPITAL G Bd$ Savings 4.5% $5 minimum n/a BS&L Bd$ Savings 3.5% $100 minimum n/a NOTICE ACCOUNTS