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Politics : Formerly About Applied Materials

AMAT 341.36

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3:59 PM EST

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To: Cary Salsberg who wrote (46113)	5/2/2001 7:19:08 PM
From: Katherine Derbyshire	Read Replies (4) of 70976

IMO, the slowdown resulted from a combination of inverse wealth effect (Internut bubble burst) and the effects of higher interest rates. >>What are the technology drivers that will return the Nasdaq companies to profitability and allow the index to move up without renewed bubble valuations?<< Right now the Nasdaq is right about where it was in August 1998. To argue that the index is still overvalued at this point is to argue that stocks were sooooo overvalued before the LTCM crisis that 2.5 years of robust economic growth still hasn't been enough for earnings to catch up to valuations. In essence, you are arguing that the economy as a whole is worth less now than it was then. But that just doesn't make sense. The Asian economies are healthier than they were, millions of additional people have bought cell phones and connected to the Internet, and Moore's Law has made computing even less expensive. The "pathetic" equipment bookings in March 2001 were still almost triple the level in August 1998. Meanwhile, even after my dot.bomb losses, even given a far shakier employment landscape, I'm still in a far better financial position now than I was then. I'm more able to buy stuff (fueling economic growth) and more able to invest (sending the market up), and I suspect I speak for millions of other investors. No, I don't expect the Nasdaq to move up like it did in late 99 to early 2000. It's quite possible that we won't see another market like that one in our lifetimes. But I think the risk/reward equation favors the longs at these levels. Katherine

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