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Technology Stocks : Novell (NOVL) dirt cheap, good buy?
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To: Jack L. Dlugach who wrote (10378)3/27/1997 11:10:00 PM
From: Paul Fiondella   of 42771
 
On the rate hike and the market

I think it is almost conventional wisdom at this point that the boomer money coming into the market has slowed down. Moreover a larger portion of that money will go into CDs and bonds rather than into stocks. This takes some of the momentum movement out of the market. No suckers to buy.

Two subsequent developments are more worrisome. First is consumer debt which is MOST effected by a rate increase. Consumers use credit cards for things they wouldn't dream of a few years ago---such as their mortgage payments and rent. There is a lot of bad debt out there and the potential for consumers to cut back on spending. Does anyone remember when we had a crunch in the 70's when banks stopped issuing credit cards to bad customers. Today everyone, even college students can run themselves into bankruptcy and no one cares.

Second is the whole positon of the tech sector as the refuge from economic slowdown because of those high year to year growth rates. Intel is this story in a nutshell. But what happens if this sector slows down. Carnage big time.

I have never seen a market this far out of whack. The PEs are off the chart. The correction potential is enormous.

For NOVL its obvious the company has been living on borrowed time. It must be clear to somebody on that BOD that they should have brought Schmidt in sooner and they damn well better not hold him back now that he is here.
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