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Technology Stocks : Redback Networks, Inc. (RBAK) -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (862)	8/20/1999 4:55:00 PM
From: Peter V	Respond to of 1956

Wrong! Aug 20, 1999 A Steady Hand Playing Web-Gear Stocks By Jeff Berkowitz fnews.yahoo.com I read the web-gear "mania" article in The Wall Street Journal's Heard on the Street column this morning with great interest. We have played in this space this year and gotten some nice returns. (Correct me if I am wrong, but the Internet-equipment companies are the best-performing stocks in the market this year.) Cramer has commented in past on the growth opportunities of some of these companies, their illiquidity, etc. Still, despite the optimism out there, the prospects for these stocks remain highly questionable. The bull case: There are no greater growth opportunities in the market today. I certainly understand the attraction to the Redbacks (Nasdaq:RBAK - news) , Gadzooxs (Nasdaq:ZOOX - news) , Brocades (Nasdaq:BRCD - news) , Copper Mountains (Nasdaq:CMTN - news) and Junipers (Nasdaq:JNPR - news) to the go-go, high-beta growth guys. The opportunity to make several hundred percent in a stock in a matt! er of a few months is absolutely intoxicating! After all, we all know the game: Analyst expectations are set too low, these guys have unbelievable prospects and tiny floats, the value/short guys lean on them and get clobbered. (Funny how these things don't get hit on market selloffs.) Performance players like myself are often faced with the dilemma of making 15 bucks in IBM (NYSE:IBM - news) , 10 in Pfizer (NYSE:PFE - news) , 20 in Yahoo! (Nasdaq:YHOO - news) or 50 in one of these rocket ships in three days! The bear case: These things are absurdly overvalued. They are liquidity-driven phenomena. If I may humbly reference Ken Heebner's comments, they can't grow into their valuations. And there is pending competition. On both sides of the debate, I wish I had the brass to play these things big on the long side or to be as bold as the short-sellers. At Cramer Berkowitz, we are not high-beta players. We nimbly try to scalp some points in these animals, aiming to make a quick 20 points at opportune times while always fearing the nuclear holocaust on the downside. Honestly, I wish I could play them more aggressively, but I can't. We are not shooting to make 60% annually if it means that every fourth year we are down 20%. Don't get me wrong, I have great respect for these go-go guys. They are much better technology players than I am. I just can't put huge amounts of these stocks into my portfolio. I can't be there when the music stops. What is my point, besides neurotic ramblings about lost opportunities? It's that both camps are right, and I have to be agnostic. These stocks are ridiculously overvalued. Try to value any of these stocks using traditional metrics, and you can get an LSD high. Short-term trading implemented at the wrong time can ruin you. But some of these stocks will be the next Microsoft (Nasdaq:MSFT - news) , Dell (Nasdaq:DELL - news) or Cisco (Nasdaq:CSCO - news) . The Street is lined with the carcasses of their naysayers. I am a performance manager, and I have to deliver good returns. It doesn't matter how I make my money at the end of the year. All that matters is my returns. The volatility in this sector is too great. I have to play. No religion, but I do my best to make money while balancing the risk and rewards.