Winstar Comm. (WCII) Message Board

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Technology Stocks : Winstar Comm. (WCII)

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To: DavesM who wrote (8451)	10/5/1998 10:56:00 AM
From: dougjn	Read Replies (1) of 12468

<<Some believe that if inflation is taken into account, the US stock market was in a bear market for the entire decade of the 70's.>> Absolutely right. And that is the only reasonable way of measuring the market. (Actually what one really need is inflation adjusted dollars plotted on a semi-log chart -- the latter being the sort Yahoo uses for periods of a year or more.) <<Though dividend yields are at historic lows, much of this is due to the fact that the market prefers corporate repurchases of stock over dividends.>> Perfectly valid point which many of the traditionalist ignore. However, the effect of the often very substantial amounts of overhanging option grants as a substitute for (recently rapidly increasing high level) wages also has to be considered. Many tech company buybacks only keep pace with (or even don't) their option exercises. In a slowdown, or downturn, when trailing PE's contract due to risk, and earnings also come down, yet prior option grants continue to time vest (and new grants continue to be made, albeit at a bit slower pace, these can suddenly rear their heads - and further hit stock prices. Expect to start hearing a lot more about this. Doug

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