Some Comments.
1. My portfolio is 68% cash, at end of day. Most of my tax deferred IRA is cash; my taxable account holds CSCO, AMAT, KLAC, ASYT and GE.
2. Technology stock valuations reached absurd levels and many are still absurd after trading down 50-60% from the highs.
3. Interest rate AND inflation have been rising. These are normal after a long expansion, but they point to a significant slowing of growth rates and the possibility of recession. Slower growth requires lower PEs.
4. The outlook for semi-equips looks positive for this year and next and the valuations are down to reasonable levels, but how much do you pay for an industry which might "fall off the edge of the world" in 2002?
5. Technology advances have been held up as a reason to ignore the posibility of typical economic cycles. The 20th century began with little or no radio, television, telephone, automobile, airplane, electric lighting, plastics, antibiotics, recorded music, motion pictures, and computers. The internet is great, but tremendous technological advances in the 20th century did not eliminate economic cycles. |
