Charles,
I don't see any point in criticizing Ballmer for the opinions they hold. The main consideration in the minds of most investors when they sell individual stocks is either the stock is overvalued or the market is overvalued. Nobody could be reasonably be expected to sell stocks if they always believed that it was undervalued. The perception of value is entirely what exists in the investor's mind, and for me that is formed through historical measures. Nobody will argue that the segments of the market are excessively valued given historical measures.
Henry Blodget and other sell-side analysts (whose main job is to make money for their employers touting stocks) can establish outrageous (by historical measures) price targets for individual stocks, using valuation schemes that have not yet been validated over time. They wer pounding the desk when AOL was 170, they are pounding the desk with a substantially lower price target today, asking people to buy a "holiday basket of internet stocks" - whatever the heck that means. Barrons articles' every week considers the AOl to be worth half relative to where it is.
When segments of the market get as out of whack in terms of valuation as the large cap high tech names and Internets are today, caution should exceed greed instincts if your holdings are concentrated in this sector. IMO, Ballmer is right on the money when he makes a blanket statement considering most stocks, including his, overvalued.
Given that my core holdings have done exceptionally well this year (INTC, SUNW, LU, NT, etc), I don't have any reason to complain about the market rise. However, I think days such as today are needed for a healthy market to wring out excesses.
Regards
Alok |
