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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 139.09

-0.8%

Nov 21 9:30 AM EST

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To: Stitch who wrote (5140)	1/1/1999 2:12:00 PM
From: Robert Douglas	Read Replies (2) of 9256

Do we really get too close to the subject that we disconnect from market mania? Perhaps. You would never kiss anyone if you looked at them really closely. <g> Knowing and seeing all the warts on an investment can be counterproductive if it consistently keeps you from investing. I know some very smart people that have been in cash since 1987 just because they can see too many negatives. Investing is a balancing game where you need to weigh the negatives against the positives. If you wait for the perfect investment, you will wait forever. Lawrence - or is it now gloom and doom Larry? - thinks the market is efficient. I think the market only likes to pretend it is efficient - that there is a reason and a rhyme to every move. The reality is that stocks can move down when things are good and move up when things are bad. [HDD stocks recently?] This can be maddening at times, especially when the most informed miss out because they know all the problems. All my years of finance have taught me that placing value on an equity is highly dependent on some very sensitive inputs - like interest rates, profit margins, growth rates etc. A small change in any of these can produce large changes in value. So if analysts were brutally honest they would make statements like, "Seagate is worth $30 a share give or take 50%." With such a large range and with so many unknowns, the emotional element enters in and you get the "random walk" that gave birth to the notion of market efficiency. I always like to use the rule of thumb that if any opinion is mocked, then the consensus must be so strong that it is already in the market. Sort of like the way anyone who said anything positive on Asia was mocked several months back. Once the bad news is in the market there is nowhere for it to go but up, even if the bad comes true. Knowledge is only unproductive if it closes your mind. -Robert

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