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Technology Stocks : Western Digital (WDC)
WDC 181.88+7.3%3:59 PM EST
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To: Thomas George Warner who wrote (7526)11/12/1997 8:16:00 PM
From: Pierre-X  Read Replies (1) of 11057
 
Re: Crystal Balls and Rabbit's Feet

>In retrospect though all of the fundamentals looked good, how was >one to know.

It's true, I believe 4 months ago any prediction of the current disaster would have been met with ridicule.

1Q98 was the first major indication, as SEG attempted to pull muscle on the low end.

Well connected observers might have noticed the ramping in capacity here and abroad. But growing capacity in itself would have not been a concern.

Extremely astute and paranoid observers might have delved deeper and noted an UNUSUAL growth in capacity. The fact of the matter is, 1993 through 1997 was a big party for the principal drive makers, and they made a ton. In any quasi-commodity business, parties attract party-crashers, who then generally ruin the party for everyone including themselves. You can see this happening in all kinds of businesses. It happened to DRAM two years ago. Apparently it's happening to HDDs now, and rather exacerbated by a pretty nasty correction across the entire tech sector.

Bottom line, it would have been hard for the average informed investor to have known. The average uninformed investor (the ones who bought WDC in the 70s) had no chance at all.

Pierre-X
(Looking for a reason to hold my big WDC position.)
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