I found this very interesting, and thought you might enjoy reading it.
: David Todtman who wrote (9340)
From: JMD Friday, Apr 21, 2000 6:56 PM ET
Respond to Post # 9359 of 9363
David, here are my two centavos on an Easter Sunday weekend. I think the points you make are solid, and would certainly agree that the psychology of the market has changed. It remains to be seen, however, if the long term, grinding, bear market you describe will materialize. I say this not because I think the twin towers of greed and fear have been repealed--indeed they are alive and well as ever, IMO. These emotions underly the business cycle, which therefore stands unrepealed as well.
So what's different? In a word, the instantaneous nature of our society. Andy Warhol's 15 minutes of fame applies to everything. The NAZ is already down 30% give or take, and it took all of 3 weeks or so to accomplish. Declines like that used to take months. Some issues are off 60-80%, with JDSU somewhere in the middle. It's market cap has zipped between $55 and $80 billion faster than you could shout "overvalued" or "undervalued".
My guess is that we'll have three or four bear markets, and three or four recoveries before the end of this year. I'll also hazard a WAG that the NAZ will be little changed from year-end 1999 to year-end 2000, with all that implies for extreme volatility. That should be enough to smoke the hot money out, not to mention the margin 'investors', as well as a big chunk of the first wave of internet casualties. [I also tend to believe in revenues, and, god forgive me, profits.] There will be real losses, as many learn the meaning of whipsawed. And those folks may well not stick their noses back in the market for many years.
BUT, the boomers ain't done saving for retirement and are in prime capital formation years. As that pig has gone through the demographic python, it has turned every rule of thumb on its head. An 8 year bull market is unprecedented, but the boomers have a long track record of unprecedenteds. Alan Greenspan does not have the authority to prick a spec bubble in the equity markets: he is, by law, to be concerned about money supply and the general level of interest rates, and only those two things. Guess what? He did it anyway, thank heavens.
I am long CTXS, think it's a terrific company, number one cheer leader, all that stuff. Two months ago our son finally succumbed to my enthusiasm and set out to buy it for his own portfolio. "Over my dead body, said I. Great company, lousy stock price." I may let him take a shot on Monday if the MSFT news whacks another 5-10% off the party as I suspect will be the case.
The technology driver for this economy is still very strong but the progress is not linear. We've hit a speed bump, one of many more to come. There's still big money to be made, but maybe not till the next phase begins. It's no different than playing poker: you can't lose your stake before the cards turn your way. And in this era, that could be three months from now. Nobody can even begin to fathom the envrionment three years from now {except that Elian Gonzales will be a trivia name, guaranteed}.
So I think everything you said is right, but not the timing. The talking heads will be trashing the stock market for a month or two, and then they'll be singing its praises thereafter. Meanwhile the boomers will keep on investing cause 30 year T-Bonds at 5.8% ain't gonna get it. And what will they invest in? The Fortune 500 of the Information Age, of which I expect JDSU to be a member. Wow, sorry for the long ramble! best, mike doyle |
