"Longer term investors will be happier to see MSFT go down to around
120 - 130 in Jan so that MSFT starts stock buybacks and put warrant
sales, currently it is not able to due rich valuations."
I also see 150+ by mid January, running up to earnings, and a split announcement.
I also question the conventional wisdom from all the established brokerages and CNBC commentators that we are heading for a tech wreck due to tulip.com mania. I think the valuations are overdone, yes. But most of the buyers (according to CNBC) of the net stocks have been in several hundred share amounts. That says individuals. Maybe there are some institutions in there too, but, I don't see a run to the exits all at once. YHOO, AMZN, EBAY could all stand to lose 100 points, sure. But that would be OK.
We do have CSCO, MSFT at unreal valuations; I'd have to check to see if INTC, WCOM are as bad. But the Internet really is a whole new world. And it will accelerate, and suprise on the upside in the year to come... and the years to come. The gorillas are positioned to benefit more than the smaller companies. The lesson of the market over the last year or two is to own those companies, and the returns will come. Maybe our expectations for valuations will fundamentally change. Maybe we should think about Old Economy vs. New Economy, as Michael Murphy suggests in his technology stock newsletter (sorry, I forget if that's the right title). So, if I am a mutual fund manager, and I have lots of new cash on Jan 1, I think I am putting a good chunk of it in the gorillas, despite the valuations. Maybe not all of it up front; maybe some kind of dollar cost averaging, or waiting for dips, which will come. But some of it without a doubt. On the other hand, I might wait a few weeks... the Senate trial is set to start Jan 7, and will be distracting despite what people say about Greenspan and Rubin being the really important guys in Washington.
The bottom line is I expect a Jan rally, with MSFT one of the winners. |
