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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (2248)	5/15/2001 7:40:33 PM
From: GraceZ	Read Replies (2) of 24758

What is interesting to me is that over and over again looking at some of the high flying tech companies I follow, I'd see ballooning G&A and Marketing and Sales expense lines. This happened even while revenues were climbing at astronomical rates in some of these high flyers. The revenues didn't fall significantly for a few quarters after these other expenses rose. All I could think was that some of that sales expense was coming from concessions made to keep top line revenues up in the triple digit growth area that WS was demanding of a company with a ridiculously high market cap. Enough companies were doing this that it essentially became a big Ponzi scheme that had no way of continuing. I can't see laying all of that on the Fed and excessively loose monetary policy. It was driven by speculative greed more than anything else. The quest for the new MSFT or CSCO. The other factor aside from the Fed is that technology is naturally very disruptive and deflationary. Before plans can be finished executing they are being made obsolete across a wide variety of industries. Especially all the work that was done on the communications infrastructure. As a side note, I read an interview with Andy Grove last night in Wired Mag. He said something very poignant. He said years ago when he would get together with others in technology and talk about the infrastructure needed to create this big network called the Internet, everyone would agree that it was going to cost a bundle and it would take forever to implement because something that big would probably take government money. He basically said that what he thought would take years and years went forward so much faster because everyone contributed by investing in these Internet companies and communications companies. So everyone who lost money in the Nasdaq tech stock bubble(including himself) sort of paid a special tax to get it built all at once. As with any capital expense, there is a lag time before you put something into service and that thing starts to pay off. This money didn't fuel a consumption binge, it fueled a build out. Somewhere down the line there has to be some sort of ROI on it, right?

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