Rockwell-Spins off Conexant (CNXT) Message Board

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Technology Stocks : Rockwell-Spins off Conexant (CNXT)

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To: gpowell who wrote (1076)	5/13/2000 3:37:00 PM
From: David W. Taylor	Read Replies (1) of 2013

Wow! You really are a "Random Walk Down Wall Street" sort of guy. In response to your treatise I would just say that inflation is here in four major areas that I can name: food, energy, wages and housing. Raw materials are less certain. In certain cases raw materials are in a deflationary mode. The prices of stocks are not seen as inflation merely as a response to inflation. Grossly then the cost of providing goods and services is rising, which means that a Dollar is worth less than it used to be. Add to that fact the Stock Market Bubble and the interest rate increases that we have seen and will see. I do agree that a complex thing can have unpredictable reactions to individual stimuli but I think we have a much simpler thing in the stock market reacting to all of the above at once. Take into account the lag, add in the market's tendency to predict and "build in" the response to those predictions and you have a strong likelihood of movement in the downward direction. People will see the current uncertainty, add 2 and 2 and start to realize that a better way to hedge is to look again at other forms of investment such as Bonds and Gold. Let's face it the rate of return for most CNXT holders over the last year is negative. 6.5% and total lack of risk makes T Bills very attractive against losses. To all of this add the ridiculous overvaluations of certain stocks (CNXT is still at least double fair value) and you have a strategy. Everyone is free to choose their own, of course, but I think a strategy based on the above bearishness is preferable. Time will tell.

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