| I'm looking at a chart (can't paste, sorry) at Merrill Lynch research, saying that Tech, as a % of the S&P 500, was in a 10-16% range from 1980 through 1996. Then, it zoomed up to a high of 36% last year. Now at 16%. Since tech is a much larger % of the total economy, now, compared to 1980 or 1990, it looks like the ratio is back to a reasonable non-Bubble range. The PE of techs looks too high now, because we are seeing a "100-year flood" event, in terms of margin declines, sales declines, and therefore profitability declines, for techs. Every tech company is sized too large. As you say, we've never seen an event like this. Tech stock prices, IMO, are pricing in a bottoming in sales and margins in 1H02, and a strong rebound in both those measures, in 2H02. If it happens, now is the time to be loading up on techs. If it doesn't, we have another large step-down in the Nas (below 1000) in 2002. I'm betting it does, but I'm hedging my bets by selling any strong rallies in anything I own. |
