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Technology Stocks : eDrugstores: Drugstore.com, PlanetRx and Soma

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To: Firenze who wrote (238)	12/1/1999 12:32:00 AM
From: Tom D	Read Replies (1) of 254

I am more optimistic--I figure it to be at $60-$80 within 6 months. I am on the board of trustees for the $15M pension fund for my medical group. Smith Barney has been advising us regarding which money managers we use, as well as for asset allocation for three years now. They have a bond prediction model which has proved astonishingly accurate over the years that they have worked with us. They successfully called 14 of the last 15 major moves in the bond market over the last 10 years. For example, they were sort of embarrassed when they predicted the move of the long bond to 4.7% last year, since it seemed so implausibly low. But their model called it, and they stood by their model. Turned out they were right. They won my respect with that call. Anyway, FWIW, they met with my group on August 17 again. Their model predicted the long bond to return to the 6.0 to 6.5% range for the rest of this year. The interesting part is that they expect the long bond to revisit the 4.5% level and to remain below 5% for as far out as they can see: i.e. for most of 2000 to 2002. Since these net stock valuations (on the rare occasions when somebody tries to be rational) are based on discounted earnings in the distant future, and the discount rate is interest sensitive, I think many net stocks will be doubling again in the next six months, since this interest rate move has not been priced into equity valuations. The major reasons for the yield on the long bond to dive are the disinflationary effect of eCommerce, as it ramps up, and more economic globalization. Isn't it kind of irritating when the jokers are right for the wrong reasons? There was a lot of that on the AMZN thread--newbies predicting the company would be worth a billion zillion trillion dollars, and they turned out to be right, while the shorts got slaughtered. Oh well, JMHO. Tom

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