. . . . . . .On the Future. . . . . . . Herringbone, unfortunately yes, what you read is exactly what I meant.
I don't take my predictions lightly. . .and my reputation goes on the block with each prediction I make. . . .however, we have been adrift for several weeks with NOBODY making much sense of these markets. . . so that is when I stare out the window all day long until I get a sense for what the future holds. I know it sounds bizarre, but that is the way I work. . . .taking in the data. . .then waiting for a clear picture of the future. Sorry if this offends any with analytical minds. . . .I use analysis as part of my input. . .but I use many other indicators, history, sentiment and other factors as input as well. There are no guarantees. . .but I have done OK.
So yes, I believe we go HIGHER from here . . . and I believe that those in their right minds will NOT selloff after the first. . . and I believe that the cash infusion after the first will be considerable. . . and that the current high fliers will fly even higher. . . and I totally agree that this market is pure insanity.
However, I also believe that the tech industry has spawned the sort of companies that are money machines. DuPont, XOM, 3M, Alcoa, Kodak. . . are not money machines. . . IPOs are money machines. . . so ICGE, CMGI, CMRC [and soon VERT] are money machines, because they give birth to IPOs. . . business models like EBAY are money machines. .
And whats more. . . .the internet is not a fad. . . . it is our future. . . and it is still in its infancy. The current text based internet is nothing compared to the audio/video on demand that is being tested right now. Television, radio, records and even video games are all subject to losing their share of discretionary income. . .once the internet is running primarily via broadband of 3Mbps + via handheld wireless devices and set-top boxes.
And soon we will be using our cell phones like credit cards. . . calling in our own charges for whatever we wish. . .including a soda from the machine in front of the brokerage house.
Industry is changing GLOBALLY. . . .productivity has never been better. . . and this is due to strides made in communication, networking, inventory control, just-in-time delivery and business-to-business e-commerce.
What does all this mean? It means the world is different now. No longer do we base valuations on PE ratios of 21. A company can be earning negative 4 bucks a share today . . . and positive 8 bucks per share one year from now. . . . the world is different. . . but it is still in its infancy.
I say all that to say that the insanity is justified. Many of these companies are WORTH the price they are currently at. . . .that is why they keep finding buyers. . . the buyers are not ignorant. . .they are more informed than ever before.
Touchdown Marino!! . . . [Ooops. . sorry.]
Not all of these companies will be winners. . .but as the super cash rich AOLs, YHOOs, JDSU's and CSCOs get larger and larger they buy up the best companies. . . leaving room for smaller ones to be bid up. . . and so it all seems ridiculous. . .and yes, the valuations are extreme. . . but I if we were to stop right where we are with stock prices. . . and wait for 3 years. . . I believe that valuations would seem low, based on the real measurement of valuation. . .earnings. I believe that if AMZN stopped its buying spree and rapid expansion program. . . it would be profitable within a year or so. . . .
Now this is a bullish view, I admit. But what would the true bear say? "The internet is a fad. .It will never catch on. .These internet companies will never make money. . " ??? Believing that the internet will NOT change all our lives is the real insanity, IMO.
I imagine we are in much the same place as investors were in 1899. . . when folks started replacing their horse and carriages with horseless ones. . . and young men with vision were running around signing deals to locate fossil fuels, establish trade routes, build refineries, design means of distribution and actually build a network of stations to sell these fuels . . .in hopes that the horseless carriage would be more than just a fad.
And for 10 years, such men were thought to be idiots. Can you imagine what the bears were saying to these men each time they entered a meeting to raise more cash?
In 1899, Henry Ford quit his job of 8 years to make automobiles full time. . . he had already been driving one of his own design for 3 years. . . .it was just a matter of 4 years before Ford Motor company put the model A into regular production.
In 1901, attorney George Getty took his nine year old son Paul and his wife out of Minnesota to Oklahoma to dive into the oil business. Was he insane? Many thought so. But by 1914, Henry Ford's motor cars were in mass production in Detroit, while J. Paul began to work on his fathers oil fields and Getty Oil had become a major corporation.
Within 10 years, both companies were considered the most successful in America.
And here we are again. . . 1999, and countless visionaries see the future different than many of us can imagine. Some have already become tycoons. Others are still thought to be insane. Who is to truly say which will win and which will lose by 2014?
Certainly, the world will be a different place.
Rande Is
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