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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (22551)	9/11/1997 12:33:00 PM
From: Sam Citron	of 132070

Mike, Good comments about supply and demand. But houses in River Oaks do not obey Moore's law. If they did, there would be fewer homeless. While I agree that managers are often fixated on GROWTH and are often overzealous in expanding capacity to meet real or imagined demand, I would not yet use the term "mania" to describe this high-tech expansion. The laws of economics have not yet been repealed. High gross profit margins in certain tech businesses warrant expanded production. If prices thereby fall, profits may be maintained or even increased if there is sufficient elasticity of demand. Current demand for particular products seem to me to indicate only the tip of the iceberg. Underneath is the intellectual capital a company has accumulated, which is capable of turning out a range of products. This is what I prefer to focus on as an investor, rather than the vicissitudes of demand for this or that particular product. As usual, Wall Street and the media, however, are fixated on the chimera of day to day changes rather than on the underlying and more permament superstructure (although, you might believe it is nothing more than a house of cards). What other indicators do you have to indicate that this tech cycle is near or at a peak? SC

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