Trindy, The problem most of us who do traditional style real research have is that we believe that companies will not sell forever for much more than they are worth. That has proven false for a while here, though I would still submit that the great majority of tech stocks are under water since Jan 1. In fact, the great majority are underwater for the past two years. What happens is, Compaq is a huge stock and one of the most important in the world, but when they blow up, everyone pretends that they were never a factor. Ditto for Computer Associates, which was the second largest software co. in the world. Most folks still think Microsoft is the most important tech stock in the world and it is down 40% from its peak, which I consider a significant number. Even more significant is the fact that MSFT's earnings are slowing rapidly and the stock is still selling at a nosebleed pe ratio even after the 40% haircut. BTW, have you checked any of the prices on the Internut stocks lately? Death on a stick.
So, I guess I would contend that nuclear winter is chilling up the world of technology and will continue to get worse going forward. However, it has not gotten nearly as bad as soon as I expected on the stock price side. It has gotten even worse on the fundamental side.
This reminds me of growth stocks in the late 1970s. Polaroid, Xerox and Avon had been great growth stocks in the 1960s, but growth slowed and even reversed in the late 1970s. Yet, the stocks continued to sell at extremely high pe ratios for years after growth stopped. I owned puts on them and was very frustrated for a long time. Then, suddenly, they all not only reflected their current business outlook, but even went lower than I expected them to go. That is what I see developing here. In the meantime, we have to be able to cull the moth-eaten stocks from those still wearing the Emperor's new clothes in the eyes of the ignorati. It is a tough job, but oh so rewarding. <g> |
