Ignore the dueling Y2K punditry!
Skipard's sad tale about missing out on great stocks because of doubts generated by conlficting commentary stimulated this posting (and yes, it happened to me with USRX, but never mind). In reviewing all this recent press on hyped y2k stocks, I thought about all the y2k investment press in the past. Let me tell you, NEVER get your investment advice ffrom newspaper or magazine columnists. The central themes of these y2k articles have changed, to wit:
#1 First slew of y2k articles came out Fall of 1995. Barron's had a spread on y2k stocks such as KEA and others. The argument then was that the y2k problem really did not exist, so these stocks were definitely inflated, especially KEA.
#2 The second gorup of articles came out in late 1996. This time, there was recognition that there was a problem, but that it wasn't goinmg to cost too much, so y2k stocks are hyperinflated.
#3 The third group (Bloomberg, Washington Post, etc) again bashes y2k stocks, but this time the assumption is that htere is a porblem and good money is being made, but the y2k dollars aren't rolling in as expected.
Moral: Note the shift in the underlying assumptions. From NO PROBLEM to PROBLEM BUT INEXPENSIVE to PROBLEM, EXPENSIVE, BUT LOWER THAN EXPECTED BUCKS PAID. Each new round of articles changes the underlying terms of debate in favor of y2k investors, but pundits just can't bring themselves to write something positive. Journalists are all stuck in the Wood/ward/Bernstein mentality, they htink they are oging to oncover some great fraud or scheme. If I had listened to these guys I would neve rhave made bucks on ZItel and KEA.
When you read these articles, ask yourself: Does the writer really have a firm grasp of the y2k issues? More often than not, the answer is no. Look for example at the belief that General Motors will have its problem fixed by 11/98. WRONG! It will have the code renovated, but then the testing phase begins. That is the longest and most expensive part of the y2k process. But most writers think that renovation of code is the end point. ANd jus tbecause something isn't in newsprint doesn't mean it doesnt exist. Keane has 415 y2k contracts. Can you name 6 of them of the top of your head? Did everyone have a news release?
Market inefficiencies occur when there is a vacuum of knowledge. We know y2k inside out. Houston privately e-mailed me that she beleives there will be a firesale on y2k stocks by Xmas. I say "Bring it On!"
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