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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 220.66

+1.6%

Nov 21 9:30 AM EST

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To: GST who wrote (81005)	10/18/1999 2:34:00 AM
From: Bill Harmond	Read Replies (2) of 164684

>>The key question is whether the recent decline in equity premiums is permanent or temporary. If the decline is permanent, portfolio risk managers need not spend much time revisiting a history that is unlikely to repeat itself. But if it proves temporary, portfolio risk managers could find that they are underestimating the credit risk of individual loans based on the market value of assets and overestimating the benefits of portfolio diversification. That paragraph is the key to the whole speech. He DIDN'T say equities are overvalued. He said that we must be prepared if they are and a panic ensues. The banking/brokerage industry has already taken measures to protect itself from loan losses caused by a panic in Internet issues by dramatically raising margin requirements for stocks in the sector at the beginning of 1999. To my knowledge those stiff requirements are still in effect.

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