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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 228.18

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1:49 PM EST

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To: GST who wrote (117722)	2/14/2001 2:03:44 PM
From: Mark Fowler	Read Replies (1) of 164684

U.S. Strategy: An Over-optimistic Consensus Byron Wien It often pays to be wary of the consensus. The consensus now seems to believe that the U.S. economy will experience a six-month recession and then recover in the second half. Investors have let down their guard, trusting in the effectiveness of the Fed's easing, the positive January effect, and the broadening of the market. When everyone stops worrying, I get concerned. Over the next several months I expect the recession call to become longer and possibly deeper. As Steve Roach notes, not only is the Fed easing, but it is also pumping in liquidity to help turn the economy around. Nevertheless, I am suspicious of the outcome. Europe is just beginning to slow, and Japan is in bad shape. I think the impact of these factors has yet to be integrated into the U.S. economy. News of disappointing earnings will not end with the first quarter in my view; the second quarter should also be weak, and a prolonged period of earnings disappointments will not wash with an over-optimistic consensus. I agree with Jay Pelosky that the good and bad news will probably offset each other for a while and leave the market in a trading range. Opportunities to make money are largely in Old Economy sectors, value as opposed to growth, and small and mid-cap as opposed to large cap. The multiple on the S&P 500 is still 24, compared with 16 for the Russell 2000. The issues that need to be tested are whether the market can break out of a trading range and whether the recession will last longer than most expect.

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