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Strategies & Market Trends : The New Economy and its Winners
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To: Bill Harmond who wrote (1961)10/9/2000 2:58:36 PM
From: Wizard  Read Replies (2) of 57684
 
As I was talking with one of my street contacts, we came to the conclusion that institutions just aren't supporting stocks in the same way they used to.... creating extremely volatile stocks. Since nobody knows what the right valuations are for exponentially growing companies... and combine that with the fact that fundamentals can change rather quickly, institutions just let the stocks fall and then try to buy on the way back up. Nobody supports a stock until it stops falling. buy/hold strength & sell/trim weakness is everyone's way to play this kind of fundamental environment. Of course, this just creates tremendous volatility as the stocks slide until selling exhausts itself and then there is a sharp reversal as everyone pours back into the same stocks once they hit a technical bounce. Throw in a large lock-up release here and there with nobody supporting the stock and you get some very strange looking charts.

I do see some fundamental weaknesses in the tech sector which is different than this past Spring. PC stocks and anything related to PC's are in for tough sledding over next 4 quarters. Handset growth has clearly moderated so there is going to be a lot of fallout in the wireless sector (with some notable exceptions). There is obvious trouble in telecom services. However, B2B and wireline communications are sources of strength and in direct contrast to these other decaying sectors of tech. I don't understand why valuations are this low but hence, an opportunity. buy buy buy.

I am chock-full loaded in CMRC/ARBA/ITWO at this point.
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