Sam, Some is related to worry over the Asian currency crisis, but most has to do with overcapacity in everything related to computer or communications technology. When Tellabs, a very well-managed co. gets wacked, you know the commo cycle has either already peaked or is very close to the peak. The growth #s thrown around were always nuts, but the capacity has been built and is being built to meet those expectations. Just ain't going to happen for most cos.
Every tech cycle, we have a generation of investors who get google-eyed over demand #s. That demand doesn't come through, but, is still good. Supply always rises to meet and exceed that overestimated demand. The Asian situation just speeds the process. And techs aren't alone. It happens in every mania, energy, gold, conglomerates, biotechs, etc.
One problem is, folks don't seem to understand the difference between demand and wants. I want a house in River Oaks. But it is not effective demand because, though I could afford the house if I was willing to sell a lot of plasma -g-, I couldn't afford food, furniture, a car, clothing or soap if I bought the house. So, if some goof asks me if I would like to buy a house in River Oaks, I will say yes. If he asks me when, the date gets pushed out a bit. -g- Demand bulls always assume that money grows on trees and if folks want to build a chip fab or a phone network or a home computer, the money will be there. And that is not the way the real world works. MB |
