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Strategies & Market Trends : The New Economy and its Winners

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To: Bill Harmond who wrote (7792)	7/2/2001 4:37:28 PM
From: craig crawford	Read Replies (1) of 57684

>> The market was higher after he started raising rates. No big deal on timing. << i suppose you make a point there, but you have to remember that in the aftermath of a bubble nothing ever comes back quickly. it takes years and years, oftentimes decades. so even if the market has ignored the rate cuts in the near-term, that doesn't mean if/when it does finally start responding to the cuts it will respond in a fashion like 1995! stocks may register nominal gains in the next few years, but after adjusting for inflation they will be very low or likely negative. then what? >> However if a business process has attractive ROI (particularly savings to fixed overhead) it will be deployed. There is no shortage of need for savings, ever << perhaps instead of spending more money on technology to try to wring out cost savings, it's more beneficial to spend less money by laying off workers! especially if demand is weakening. >> The whole productivity boom wasn't built on "nice to have" technology. It was spent on technology that got more done for less money << perhaps IT spending was so beneficial to productivity that companies already shot their wad and spent all they needed to on technology! perhaps IT spending was financed by increasing returns in the stock market and rising corporate profits. with that now in reverse, perhaps any future IT spending they need to make will be done only when the price is right because there is so much oversupply and hobbled suppliers are all vying for any business they can. bill, the simple fact is a couple years ago everyone felt they had to have a web presence. everyone had to have a corporate intranet. everyone felt they had to upgrade their supply chain. everyone felt they had to spend as fast as they could and it would all pay off. companies just aren't taking that approach anymore. and the powerful old economy companies with lots of cash and clout can tell people like cien to go fly a kite. sure we will be happy to buy your equipment. but not at last years prices! there are 5 other competitors vying for our money now mr ciena, you better give us the lowest bid! >> Then the only bet is how long this all will go on until there's marginal return. I know I'll be dead before this is halfway over << what will go on? IT spending? it's already collapsed! productivity? it's collapsed! what exactly has to continue growing to the sky? >> This is as big as railroads were in 1840 Like the railroads we have seen the first bust. That didn't stop anything. << busts were a lot shorter back then when there wasn't a fed to flub things up. even then there was a depression until 1843. >> "That bandwidth" is a whole lot of different protocols. A bet on telecom equipment here must be built on understanding the creative distruction happening in the whole industry << instead of trying to tap dance through a minefield hoping to pick the one or two companies that go unscathed, why not just pick a sector to invest in where most everything will go up? much more of a margin of error that way. william it's just silly for you to own all these tech stocks. maybe a couple here and there will turn out to be winners and find a way to generate returns for you, but the vast majority will probably go nowhere. now on the other hand if you held a portfolio of natural resource stocks in 5 years you might have a couple of losers but the vast majority will be huge winners.

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