Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Crimson Ghost who wrote (77674)	11/1/2000 10:31:58 AM
From: SliderOnTheBlack	Read Replies (1) of 95453

It's all about valuation multiple contractions - stupid ...Altera, World Com today; something else tomorrow. Valuations - ie: multiples; are too high; much, much too high - period. Virtually the entire NAZ & the Tech Hi Flyers were priced for perfection; actually with $251 Billion of margin leverage "still" (not for long) in the market - they were & are inflated-levered & pushed; beyond perfection; but "perfection" has ended. We just had 3 major factors that required this contraction of valuation multiples. 1. 6 Straight Fed Rate Hikes ... a higher rate enviornoment requires the discount of both present & future earnings; ie: lower market multiples. Throw in a junk bond/capital access - liquidity crisis as well. 2. Weak Euro/King dollar ... a negative double edged sword here actually for which all "chickens must come home to roost" - ie: King Dollar attracted excessive foreign capital which in essence - created the same inflationary/levered effect of margin in the NAZ/HiFlyer Tech Stocks. Now the Crashing Euro has dramatically slashed the earnings of US Global Companies - which is causing all the warnings, misses & lowered guidance to growth. - you can't have it both ways & we're now at a point if the US Dollar moves "any" higher; the impact to US Corporate Earnings will be violent & the stress fractures King Dollar is causing in Foreign Currencies & markets is most ominous - not that anyone is heeding those early warning signs either ~ 3. Slower GDP Growth - "The Soft Landing" ...you can't maintain the same valuation multiples, growth, or earnings into a "Soft Landing" ...common sense and another double edged sword for the markets. Yes; the "Soft Landing" keeps inflation at bay (allegedly) but; it also slows growth, spending and ultimately earnings & revenue growth - which requires lower valuation multiples. It's all about valuations (multiples) - Stupid ... and the NAZ is going to continue to come down - the rate hikes require it, the US Dollar/Euro relationship requires it, the lowered guidance requires it, a soft landing requires it and gravity & reality require it. Out of curiosity; aren't the Nazaholics seeing "head & shoulders" charts in their sleep yet ? ... or; do charts, trendlines & technicals no longer matter ? Only the ESF is keeping this market glued together...post election; all the Kings horses & all the kings men; aren't going to be able to put the NAZ together again ... Get over it; put a fork in it - it's done ~

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