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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.94

+1.1%

Nov 28 9:30 AM EST

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To: JDN who wrote (34501)	4/29/2000 10:12:00 AM
From: lawdog	Read Replies (2) of 77400

JDN, I may be incorrect on this point, but weren't the Tiger Funds value oriented? Anyway hedge funds have their role in markets. They provide liquidity and reduce volatility by shorting overvalued stocks and going long undervalued stocks. Two possible problems: First, average investors (especially boomers who are getting ever closer to retirement) may decide that the markets are just to risky because of the gut-wrenching ups and downs. I know most average investors claim to be 'long-term' and are supposed to be much more sophisticated than in previous years. But the average investor is not likely to welcome huge swings in their portfolio values. This is Psych 101. Second, instability in financial markets may cause foreign investors to flee. Volatility increases risk. Higher risk makes markets less attractive (especially in a risk/reward evaluation). This could further the liquidity problem outlined above. We must have foreign dollars in our market in large amounts if we are to sustain valuations at these record levels. Watch for a weakening dollar for signs that this is occurring. I am certainly no expert on these matters, but it seems that the risks are there and are increasing. High multiple stocks, like CSCO, that rely heavily on their ability to print their own currency (options for employees and stock to purchase companies) could be hit the hardest. Look back during just the short bear period we experienced (not saying that it is over - I believe we are still in a bear market) and and see how employees reacted (they wanted cash) and look at the number of IPOs and secondaries that were postponed. What if this instability continues for months or years. It would not be pretty. These are macro problems and I know you are all more interested in discussing CSCOs latest high speed routers so I will leave it that. Best of luck.

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