I would not feel that it [tech stocks, not including e-commerce) was manic, simply too speculative and too richly valued.
Agree. I believe we technology investors and the analysts need to be more precise in our descriptions of market segments. The retail companies using the internet should not be included in a segment called "technology", anymore than drug companies should be.
This subtle change in our designations means that the e-commerce sector can be described as manic in its valuations. The technology sector is too richly valued.
However, there is a relationship between these two measures in these two sectors. The explosive growth and promise of the e-commerce sector is resulting in increased long-term demand for the products of the technology sector.
So, even though the e-commerce sector is bound to encounter a painful shakeout and re-valuation of their worth, the growth and profitability of the technology sector is relatively predicable. The demand for products from the technology gorillas will not be affected by an e-commerce shakeout. Therefore, a shakeout or valuation correction in e-commerce should not rationally affect the technology sector.
We really must be more careful to realize and explain that the e-commerce sector and the technology sector are mutually exclusive with disimilar equity market pressures.
FWIW
I originally invested in msft when it's pe was 20, and I caught csco in the low 20's, and avoided INTC years ago with a pe of 18, when it's average had been 12-15 before, therefore I am uncomfortable.
Do remember that in the days when INTC, CSCO, MSFT had PEs of 18-24, the ability of these companies to dominate their product domains was hardly even discussed. The growth for demand of their products was not generally seen, and the technology consumption engine called the internet wasn't even a glean in McNealy's eye. |
