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

AMZN 229.55

+0.2%

Dec 5 9:30 AM EST

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To: Mark Fowler who wrote (124251)	4/28/2001 2:23:22 PM
From: H James Morris	Read Replies (1) of 164684

>IT IS an acknowledged truism that stock markets are compulsive users of crystal balls and anticipate events well before they happen. In the case of good news, this is reflected in the cliche that "it is better to travel than to arrive". Or sometimes we are advised to "buy the rumour and sell the fact". For bad news, we argue that it is already "discounted" or "in the price". Either way, there is always a tendency for markets to fall on good news and to rise when things look bad. And so we come to today, where share prices continue with their excellent recovery while all around is doom and gloom. Not only do we have the transmission of foot-and-mouth to humans, but the fall-out from the technology and telecom slowdown has arrived. Logic would suggest that the wholesale cutting of global workforces by these companies would signal a similar response in their prices as investors get confirmation of how severe the fall in demand has been. But on the contrary, the stock market has seen this coming for several months and has been fully expecting it. Indeed, the response by companies of cutting their cost bases is being positively welcomed. Returning to market adages, "it is darkest before the dawn" and investors are taking the view that everything is now so gloomy that things can only get better. This does not mean that it is now safe to again reach for the wellies in the hope of filling these with one-way-bet tech stocks. Individual shocks are still going to be common and Murphy's law dictates that whichever stock is alighted upon will be the next to catch the market unawares. What it does show is that an awful lot of bad news is already reflected in share prices: the market's consensus view has been that we are about to enter a very severe economic slowdown. When this fails to materialise, as it will, time will show many share prices to have been very cheap over recent weeks.

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