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OK, here is the first draft of a letter to Louis Rukeyser. To those
who wish to add their names at the bottom of this letter, please post
replies with your suggestions for editing/revision. I'll be out of
town working all of Thanksgiving week (so I can pay my AOL bill).
Let's plan on sending the letter during the week of 27 November.
30 November 1995
Louis Rukeyser
Wall $treet Week
Maryland Public Television
Owings Mills, Maryland 21117-1499
Dear Mr. Rukeyser:
We, the undersigned are participants in a World Wide Web discussion
group called the Silicon Investor, which has more than 2500 registered
participants.
We are mystified by the recent published opinions of Richard
Whittington (Soundview) regarding Micron Technology, downgrading the
stock without explanation two weeks after an UNCOMPROMISINGLY bullish
evaluation in Barron's. We do not think that anything fundamental has
changed about Micron Technology or many other tech stocks that have
recently taken a beating. On 10-6-95, Investor's Business Daily
published comments by Tom Kurlak of Merrill Lynch; his opinion was
that Intel, Texas Instruments and Micron were still "tremendously
undervalued...They could double and triple on the basis of earnings we
can project near-term." Yet, about a month later, Mr. Kurlak
downgraded these stocks.
We suspect that this behavior on the parts of Mr. Whittington and Mr.
Kurlak are more related to the "annual fall cataclysm" rather than
changing fundamentals. In the October 1995 issue of Smart Money (the
Wall Street Journal Magazine), James J. Cramer published an article
entitled, "Unconventional Wisdom: The Big Sell-Off." Basically he
contends that there is an annual fall cataclysm related to fear on the
part of the mutual fund industry (fear of stumbling in the
homestretch), selling to lock in gains, and associated panic:
"Ultimately, this tortured cycle of professional greed and fear is why
you, the individual, can score such huge long-term gains, while I, the
gunslinger, must sell my best holdings with the hope that I can beat
other winning managers to the punch." In Mr. Cramer's opinion, Intel
and Motorola are "the Coke and Pepsi of the 90's," and Hewlett-
Packard is "perhaps the world's greatest manufacturing company."
However, there is also evidence that some large mutual fund managers
take a longer term view regarding silicon high tech stocks: on
7 November 1995, the Boston Globe said, "As for those who fret over
Magellan's big investment in technology firms, and there are many,
Vinik thinks their angst is unwarranted. It is, he said, still the
best place by far to find top-tier growth prospects. 'There is
nothing I am hearing from companies that would have me change my
heavy exposure to technology, cyclicals and financials,' said Vinik."
Mr. Rukeyser, we hope to persuade you to provide a public forum on
Wall $treet Week to explore some of these issues. We believe the
issues are important: they relate to the extraordinary fact that we
are experiencing the communication/computing/information revolution
rather than reading about it in history books; to the behavior
patterns of individual investors and large institutional investors;
to the education of individual investors; and to the ability of
individual investors to succeed. Ironically, individuals are likely to
invest in the companies that make the information superhighway
possible, the same highway that gives them very rapid access to a
bewildering array of information, including the opinions of pundits
like Whittington and Kurlak; that information can be very powerful of
course, either contributing to or inhibiting panic when a stock price
moves sharply but the fundamentals dhave not changed.
Parenthetically, I noted the discussion of individual investing versus
institutional investing in your 25th anniversary program: one
panelist thought that individual investors were doomed to sucumb to
the mutual fund industry, while another thought individual investing
would remain viable.
So, we would urge you to produce a special edition of Wall $treet Week
devoted entirely to these issues. How about inviting Mr. Whittington,
Mr. Kurlak, Mr. Cramer and Mr. Vinik? Instead of your usual panel of
regulars, how about a format (like the 25th anniversary program) where
you direct questions to these individuals? We would suggest that you
consider questions from individual investors directed to these guests;
as a group, we would be willing to draft questions for your
consideration.
We invite you to register as a participant in the Silicon Investor
group, and to reply to this letter online (http://www.techstocks.com).
Of course, you are welcome to reply to Daniel P. Wirt via U.S. mail,
and he will post your reply online.
Sincerely,
Daniel P. Wirt
(and many others, I hope) |
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