Hi stock bull, John (aka highlosel), Bernard and any others still standing:
I post because I agree with stock bull's assessment and wish to add or provide some comment. I agree that the inflation data was the "straw that broke the camel's back." Or more analogous, it was the knockout punch that the bears were looking for following an already dazed Nasdaq that had taken a few good punches on the chin the weeks before. In other words where we are today is the result of not one event, but of a series of events. Be they fortunate or unfortunate obviously depends upon your point of view.
What I feel I need to comment on is all the gloating by the bears that have now come out of hibernation shouting that hi-tech is dead; "I told ya so;" and that the only stocks you should invest in are the ones with a long history of steady predictable earnings. The epitome of this attitude, & what spurs my comment here, was I snippet I caught last night, I think on Fox News but not sure, of this guy named Cardillo from Westphalia Investments. His comments were that investors in hi-tech have been wrong all along, which we've heard before, but with such a cavalier attitude that he had been vindicated after so many years. Another Michael Metz, whom we've haven't heard from in years. I'm sure someone will bring him back from pasture.
The essence of my criticism is that neither camp is completely right or completely wrong. Every dog has its day, and we now have to listen to these guys who have been, IMO, losers for the past 5-6 years. But more importantly, to view objectively where the market is right now. Are hi-tech stocks, the quality ones I emphasize, overvalued or undervalued?
Notwithstanding the lofty valuations high tech investors have enjoyed up until a month ago, the attractiveness of high tech stocks over the past 5-6 years is not without merit as these rarely seen bears would have one believe otherwise. What has taken place in the economy is unprecedented, and if not, can only be compared to the industrial revolution of the late 19th and early 20th Century, or the incorporation of the horseless carriage into the nation's economy 3/4 of a century ago.
IOW, there is some fundamental basis to the attractiveness of certain high tech stocks that "old" economy stocks do not present. But what needs to be distinguish, and I think has been highlight the past month, is how certain "old" economy stocks stand to benefit from the technology being delivered into the stream of commerce by several key high tech companies.
I agree with arguments at the both extreme ends of the spectrum: (1) that some of these dot-coms have been ridiculously priced and will soon go by the waste side, and should be priced accordingly so; and (2) some of these old economy stocks that enjoy established market positions today, but have failed to adequately shift the mindset to the upcoming digital economy are going to see the rug taken out from under them by more flexible, quicker moving e-commerce startups that can quickly develop brand awareness and loyalty and lure business away from old-line traditional business that have failed to "see the light."
I don't consider any of my investments to be at either end of the spectrum, but I do hold an arguably disproportionate amount of high-tech, and will continue to do so because IMHO that is where the growth is. Outside of high-tech I own some Berkshire-Hathaway, and shares in Fidelity's Magellan and Contra Funds. Last year I sold my Fidelity Select Healthcare, & to date I have missed no upside by that decision.
The bottom line to all of this is that it is unfortunate that the good has been taken out & shot with the bad. Call it guilty by association. Call it irrational exuberance "reverso." Whatever, IMHO, we are not an equilibrium in this pendulum, and the pendulum may not be done swinging against us, but over the long term, quality high-tech stocks will rebound, and those with proven earnings will, while not necessarily return to their more recent highs of a couple months ago, provide more stability and trend upward over the longer term.
JMO. |
