Humbly report, All, some of my useless thoughts on y2k stocks.
Like many of you, I've been investing in the y2k sector for years, and have profited handsomely, thank you very much. <g>
So where do we go from here? Well, let's look back, for a moment.
First there was the birth of the y2k sector, the era of pure speculation, of which ZITL in December 1996 seems a perfect example. There was no way then of getting a handle on how big a piece of the y2k pie any given y2k company will get. All we had to go on, was the now all too familiar phrase: The Gartner Group, an international research firm, has estimated that the worldwide cost of correcting the problem could go as high as $600 billion.
Than came the era of contract announcements, when press releases caused y2k moonshots.
The y2k body shop era followed, and for the first time we had earnings numbers to point the way. The y2k sector began to splinter, and the distinctions between y2k body shops, y2k tool vendors, and y2k factories began to be perceived. But it was still a time when post-y2k concerns were not being voiced, and stock valuations mostly reflected the potential for future earnings.
Clearly, given PTUS, VIAS, CMND, SEEC, etc., we are now in the "show me the money" and "show me post-y2k" era.
Just as clearly, contract announcements (even when containing large figures) either do absolutely nothing for y2k stock prices, or cause momentary spikes that are instantly erased. COGIF and TAVA are two recent examples.
So, back to the original question: Where do we go from here?
I believe y2k stocks prices from here on will be based only on present earnings (not future conjecture) and rock solid post-y2k position. I no longer believe that contract announcements, spectacular y2k failures, or general y2k panic will cause another y2k moonshot era.
I do believe there will be a y2k recession, but I have discarded my presumption that it will cause a major move into y2k stocks. Margin calls and such, I now believe, will negatively impact even the best y2k stocks. I do understand that many of you totally disagree with this premise, but since none of us have any real basis on which to make solid predictions, I choose my pessimistic presumptions as the basis of my investing strategy.
So, in a nutshell, I have chosen to disregard the "y2k sector" label, and base my investment strategy only on the present state of earnings of any given company, as well as the present state of their post-y2k position. PTUS, VIAS, CMND, SEEC, etc., have demonstrated that earnings of y2k companies must exceed estimates and expectations, or their stock prices will be instantly cut in half or worse. Ditto regarding post-y2k.
Therefore, I believe, a conservative approach to investing in y2k companies is now warranted, since at this point in time, the downside potentials appear to me at least as likely, across the board, as the likelihood of major up moves.
Some of you have voiced disdain for the likes of Mad Monk and myself, for stating our mostly cash position. Fine. We all make our own choices, and I'll be the last to advise anyone on what to do. I am not an expert, only a tiny investor with net access, and the basic ability to use search engines. I have stated my position, and I intend to act accordingly, while wishing all of you the very best!
SI, and this thread in particular, have been great sources of learning for me, and I now wish to thank each and every one of you for your excellent contributions!
All the best, and happy Independence Day to All!!!
Cheers,
Svejk
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