Running Away from Inflation (Reply to #4168)
Allen,
Thanks for your very plausible explanation of that
_New York Times_ inaccuracy about the LS-120 supposedly
being faster than the Zip. It could well be a misreading
of the Mitsubishi press release claim about the LS-120
being four times faster than a standard 1.44MB floppy,
and some of the technically illiterate on the Street
probably still don't know that the LS-120 is slower
than the Zip.
On your other point, I'm not worried much that there's
been this panic about inflation. As you note, IOMG
is rising nonetheless. Suppose you're a member of
the investing herd that's stampeding away from the
coming "inflation", and you sell off your losers.
What are you then going to do with the proceeds of
those sales? Put them into bank CDs? Of course
not. I specialize in the history of American
chemistry. Back in the 1930s, the chemical industry
was prized on the Street as a "Depression-proof"
sector of the economy, because firms at that time
were making good money off of new compounds they
were synthesizing out of the magic new feedstock
of the hour, petroleum. In other words, they were
coming up with valuable new products that sold
despite what the rest of the economy was doing.
Thus, their earnings went up, and thus, their share
prices went up.
Sounds a tad like Iomega's current situation, don't
you think? Do you really think that it will sell
significantly fewer Zip and Jaz drives because the
Fed moves interest rates up or down half a point,
or because the CPI goes up a point or two if the
Fed doesn't act, etcetera? Frankly, if the current
inflation scare stampedes investors into dumping
poor-performing or inflation-sensitive stocks, that
could well entice _more_ of them to Iomega, not
fewer. This is just a speculation on my part,
of course. Time will tell. Sure, sure, the
long-term investor must keep track of the general
state of the economy, but this current scare is
no indicator of any significant shift, IMHO.
For those of you who are followers of William J.
O'Neil and the philosophy he espouses in _How
to Make Money in Stocks_ (that is, the _Investors
Business Daily_ philosophy), does anyone see a
"cup with handle" pattern emerging in the 100-day
chart of IOMG's price and volume?
Cheers, Tom (long IOMG or, if readers prefer,
long on Iomega, though I don't see that it's all
that much different, the point here being to
reveal my stake in this discussion in the name
of revealing potential conflicts of interest,
which all ethical posters should do; to be
technical about my financial, rather than
emotional, conflict of interest, I'm long IOMG) |
