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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Teflon who wrote (25719)	7/8/1999 2:27:00 PM
From: Sir Francis Drake	Read Replies (3) \| Respond to of 74651

<OT>Hi Teflon! I agree the market is a bit skittish, but I don't think a negative finish today would be all that bad. Remember that the market just reached all sorts of all-time highs yesterday. A bit of profit taking is not bad - it actually sets you up for a nice spurt upwards, since we are still moving into the bulk of the earnings season which should be outstanding. But the market obviously would prefer to stage a run from a lower level. Think of it this way: Mr. Average Investor will figure "do I want to buy XXXX now, when it is close to its almost all time high?" Now XXXX pulls back a bit, but the economy looks good, consumer confidence is high, the FED has been temporarily defanged, and a great earnings season is ahead of us - hey "XXXX is cheap, great times ahead, BUY, BUY, BUY". There is still quite a bit of cash on the side-lines, and where are you going to put it? In bonds for 6%? Please. Which brings me to the whole bond boondoggle. Frankly, I believe the institutions are using the bond nonsense as an excuse to bring the market somewhat lower, so they can pick up cheap shares from Joe Six Pack when he/she panic-sells. The entire bond thing is misunderstood - the fact that bonds are cheap is due NOT to 'inflation fears'. Inflation fears CAN be a force that drives bonds lower (they must pay higher yield, or no one wants to be stuck with diminishing fixed instruments in an inflationary environment). But right now that is NOT what is driving the bond market. What is driving the bond market is weakness due to relative UNATTRACTIVENESS of bonds vs. other investment vehicles - in other words the OPPOSITE of what the TV talking heads claim. It is not the case that investors will flock to high bond yields, and that is taking money away from equities! The opposite is the case - nobody WANTS bonds because stocks are more attractive on a relative basis, and so the price of bonds FALLS (plus there is oversupply of corporate bonds at the moment), and the yield MUST go up in order for someone to buy these instruments. In other words, what is happening with bonds, is in my view BULLISH, not bearish. The bearish spin is what institutions are using to drive the market lower. Don't fall for it. I am looking forward to a nice run over the coming weeks (July). If we get a sell-off before that, all the better - the run will be stronger. And MSFT will do great. Morgan