Hmmm... Looks like Fleckenstein turned bearish... Imagine that! <g>
This little excerpt is making its way all over the Internet tonight. Apparently the original posting occurred at grantsinvestor.com (which I believe may be a subscription site), but the site is not functioning at this particular moment (maintenance???) and I'm unable to verify. But for what it's worth...
messages.yahoo.com
From the CSCO board
by: cha_cha_king2001
06/11/01 09:40 pm EDT
Msg: 141758 of 141846
fleckenstein - reality check
by: annon_43 06/11/01 09:35 pm EDT
Msg: 443616 of 443616
Advice contest between Fleckenstein - Maria,
Battapaglia, Galvin - I'll take Fleckenstein. Galvin says, "all that money sitting on the
sidelines. That's true and it's going to stay there patiently waiting for capitulation,
which I suspect will be half off or more of today's closing prices for the quote high
flyers of the bubble.
Consider The Source To return to the disconnect in today's stock market, please bear
with me if I seem a bit more impassioned than usual. Every now and then, I am
overcome by the sheer lunacy, and this is one of those times. At present, the madness
is particularly outlandish and demands commentary. It is offensive, to say the least,
that the very Wall Street shills who didn't even know we were in a bubble are the
same visionaries who now turn up on Bubblevision and in the press to advise that the
worst has passed and everything is going to be okay. Why would anyone listen to
somebody who had no understanding of the problem to begin with? That's like
listening to Greenspan, who has demonstrated his cluelessness on any number of
occasions. By the same token, why do people listen when management is unable to
get it right -- either because it's too optimistic, or doesn't understand its own business,
or has some other agenda? Maybe instead of listening to the happy talk, people
should start watching when management starts selling the family jewels. For instance,
early in May, Intel's CFO, Andy Bryant, sold approximately a quarter of a million
shares of stock. I'll leave it to you to draw your own conclusions.
Casino Talk The market is one big Ponzi scheme filled with people who pay absurd
prices with no regard to deteriorating fundamentals. Technology stocks are held up as
sacrosanct when in fact they have the earnings and revenue profile of cyclicals. It does
not matter that these companies are coming in with losses. One quarter ago, people
thought that tech stock after tech stock after tech stock would earn maybe $0.30 to
$0.40. Then, estimates were lowered to, say, $0.15 to $0.20. Now, losses are
showing up. But does that dissuade people from paying five to 10 times revenues for
companies that have cyclical characteristics? They are about to learn a costly lesson
about tech stocks, which I have talked about for a long time: A small decline in
revenues affects earnings disproportionately, because many technology companies
have high fixed costs.
Casting Pearls Before Swine No one would think about paying five to 10 times
revenues for a Caterpillar (CAT) or for a Ford (F). Caterpillar, after having had a big
run recently, sells at one times revenues. You can get two CATs for one AMAT.
AMAT has approximately the same market cap as Ford, and yet Ford has more than
25 times AMAT's revenues, depending on what number you choose to annualize.
Today's market participants all seem to want to play the greater fool game, not
understanding that the greater fool could possibly be themselves. We see people
trying to take a page out of the value buyers' book of buying bad news. They don't
understand that you can only buy bad news when the valuation has shrunk
dramatically, which has not been the case.
Profits of Doom Ladies and gentlemen, it's time to face the music. Sometime between
now and the end of the year, even if it does manage to rally, the market is going to be
crushed, and you will be hurt. This wipeout is not avoidable. The time to do something
about it is now, while you still can, not when the assault has begun. I am sick and tired
of all the gemutlichkeit spewing from Wall Street and the Fed and Bubblevision and
certain print publications. We had the biggest bubble in the history of the world. It has
caused significant economic damage, and that damage is spreading. Make no mistake,
ladies and gentlemen, no one is going to rescue you. But, it is not too late to rescue
yourself.
KJC |
