A Year Later, Time to Think About Buying Again
(Thread, although this article does not specifically mention NOKIA, I hope it will be of interest.)
"Everything has changed.
Except nothing has changed. As last year's euphoria has turned to this year's depression, it is easy to forget that the technological advances that drove the 1990's bull market are happening faster than ever.
Do you own a cell phone? A personal computer? Do you have Internet access? Did you have any of those a decade ago? How many of the prescription drugs that you take were created in the last decade? Did you ever imagine that gene therapy would be anything other than science fiction?
These are more than theoretical questions. Gains in technology have fueled the fastest-growing companies in history. In 1990, Microsoft, Dell Computer and Cisco had combined sales of $2 billion. Last year, their sales were $80 billion.
If you are an investor with a reasonably long time horizon — five years or more — stop worrying about the "V"
or "U" debate. The only way you will lose money in stocks is if the markets head into an "L," a bottom that
lasts for years. Anything is possible, of course, as investors in Japanese stocks are still finding out — to their chagrin.
But believing in an "L" means believing that the technological gains of the last decade were illusory.
Stocks, meanwhile, have become more reasonably valued, because they have fallen so much and long-term interest rates have fallen, too. The forward earnings yield on the S.& P. 500 is now just under 5 percent, close to the yield on long-term bonds. Cisco trades at just 33 times earnings.
The risk of a short-term recession is high. But help for the economy is on the way. Monetary and fiscal policy, so tight during the last year, are being loosened. And inflation remains only a distant threat. The biggest driver of inflation over the last six months has been the price of energy, especially natural gas, and gas prices have fallen by half since their peak in December.
This may not be absolute bottom, since the bad news will not end for at least a couple of months. But it is too late to be afraid, too late to sell at the peak. Stocks are much cheaper than they were a year ago.
It is time to be greedy".
Copyright 2001 The New York Times Company
Above excerpt from A Year Later, Time to Think About Buying Again
by Alex Berenson
From The New York Times, Sunday, March 4, 2001, Section 3, Page 1 |
