Other thoughts:
Do you agree that MSFT and INTC save the whole US economy? Remember?
We were getting nowhere in the early 80's with chip-making equipment company (like Perkin-Elmer)being hunted down by the Japanese, chip makers losing grounds etc.. All of a sudden, within years, INTC and MSFT all become a global momopoly. (without Fed's help as the big three did!) If you are patriotic, then, yes, cheers! But if your are a consumer, hey, let's think this over.
MSFT never was a first tier technology innovator. It copied everything the innovating US engineers pioneered. But because of its vision, it made it. (Thank, for that matter, to APPLE and in turn Xerox but let's focus on MSFT for now). I vividly remember the trasition from talks of X86 compatibility to Windows compatibility. We were projecting this trend 10 years back. Now, MSFT's financial power can make anything happen. They can now afford to be inventive.
And they too can be vicious.
One can discredit MSFT as much as he wants, but MSFT did pull the whole thing together. AAPL had the best technology, but they blew it.
IBM was burdened by inefficiency and missed it too.
But in one word, innovation created this mother of all bull market!
Everybody talks about the different nature of this bull market, but people fall short of pointing out "innovation". This bull market will end only if the innovation stops to bring in anything that impacts our life. For example, if the computer is already fast enough to beat the threshold of human patience, then few would rush to upgrade their computer every so often, and there goes CPQ, DELL, then INTC, MSFT, then SEG, WDC... Or maybe not, because they would become commodity and then internet telecom, commerce etc will take over the innovation role. "If carried out properly", DOW 20,000 is not impossible in a few years!
AOL is not a high tech company, let's face it. Rather, it is like Wal-Mart, or like a restaurant, or maybe a phone company. They serve people, period. Trouble is that the internet is too slow and unreliable-e.g. at closing hours, I always had to use phone trading. Web trading had not been possible at these times. (At a market crash, web may be faster than phone!)
Anyway, the trick AOL did was to push the stock higher by whatever means and used the proceeds to acquire and to expand. They make money through rallying stocks, which is a smart business model indeed. At one point, however, they'd have to deliver, as one can live on promises only for so long. Like loaning money to pay off another loan, if you don't have other source of income, the bottom will fall one day.
Actually why should AOL be singled out for cooking its book? Many companys do anyways. I have been in and out with AOL for almost two years now and have seen a lot of anomalous patterns in its stock movements. I really learned a lot from it, and was able to benefit from it, though also got burnt bad a few times for not taking profits. (Think about pain of letting 500% gain become 100% loss!) Lesson: AOL is not for investment. There started my trading love-affair with AOL. Frankly, all my losses on AOL all came after at least 100% gain at one point (stock moving 10% either way.) Half of them ranged from 300%-800% gain, mostly from risky option trading expiring within two-three weeks. (Too bad, or fortunately, I did not have the guts to put all eggs in it.) That is what I like about AOL-you can dream the impossible dream, call or put. Just need a strong heart, which I still do but might be losing it if I don't quit this soon.
I don't know if AOL will make it eventually or not, but for sure, in good times everybody will be all happy camper.
I agree with you that I appreciate opposite oppions in this forum.
For example, two nights ago as AOL announce its earning surprise, people here were projecting gap up the following morning. It was a tough call. It got me really thinking hard. Because first, a scampy $2.6M earning did not impress me and they have cooked the book and paid off (sort of) the analysts before, and second, few stock would keep going after earning if they have already run up. Third, though reaction to bullish comments for AOL usually were very violent, I saw a lot of confusion in the recent trading pattern. Therefore, I was skeptical that a gap up would be possible. (I had not cashed in yet at that time.) But definitely if it doesn't gap down, one needs to be cautious if going short, as a real bearish trend is not confirmed. One shoud just get out of long and watch. Usually, one whould expect an overshoot and take profit as that happens.
At this point, I feel AOL should trend downwards as, let's face it, Cowen and H&Q's comments were overblown. It did scare the shorts, however. I wonder, how many times can one firm "initiate" coverage on a stock? Can they initiate coveage, then drop it and then initiate again?
It seems to me that Cowen, H&Q, Alex Brown, Goldman, Lehman, Merill,
all covered AOL before. But I lost track on those things.
Hopefuuly small investor can climb up the information totem a bit more
as a result of this pc revolution. |
