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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: JRI who wrote (68730)	10/6/1999 11:07:00 PM
From: Ilaine	Respond to of 132070

JRI, interesting questions, but you spoil them by the comments you can't resist giving. Think about it, if the theories Meehan advances are of value, then the fact that they haven't worked in the short run is irrelevant. Nothing that works in the short run really matters, does it? What matters is what works in the long run, or you wouldn't be talking to Meehan, would you? Food for thought . . . .

To: JRI who wrote (68730)	10/7/1999 3:40:00 PM
From: bill meehan	Read Replies (1) \| Respond to of 132070

JRI, IMO the 1987 PSE Tech index chart is very relevant today. It shows how the hottest group, which is very cyclical, can give no sign of collapse. (If you'll recall, the market did give several warning signs before the crash in '87). It was also very clear then that technology growth was inevitable. And virtually all portfolio/hedge fund mgrs are much more heavily exposed to tech now then they were then. The I-N-T-E-R-N-E-T is simply networking writ large, and as much as other breakthrough technologies spurred manias followed by crashes followed by more efficient allocations of capital, so it shall be this time. The key to the markets (and to economics, which is why most of the dismal scientists fail to predict important trends with much if any accuracy) is H-U-M-A-N N-A-T-U-R-E. The market is nothing more than than a pricing mechanism with mob psychology the primary determinant in the short-term. I do not dispute the potential growth of the Internet, just the valuations of today's "sure winners" along with the various "lottery tickets" that will never turn a profit. I enjoy reading Drucker, but don't subscribe to Atlantic Monthly. I'd like to read what he has to say if you would be kind enough to provide a link. I'll end with a quote from John Kenneth Galbraith (A Short History of Financial Euphoria): "Past experience, to the extent that it is part of a memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present." Perhaps you're right, and this is the ever elusive "New Era", but I very much doubt it. Good luck.

To: JRI who wrote (68730)	10/7/1999 6:47:00 PM
From: pater tenebrarum	Respond to of 132070

JRI, let's not forget that all but two 'pure play' internet companies have yet to show a profit...all we know at this point is that they INTEND to be profitable at some point, but we don't know if they ever will be. what happens right now is a sort of pyramid scheme whereby new companies have IPO's and then use the proceeds of these IPO's to create an ad revenue stream for the established internet companies and buy servers, routers, PC's, etc. from the 'plumbers'. it stands to reason that once the IPO craze ends (and trust me, it will at some point) a great deal of internet related investment dollars simply won't be available anymore. the other internet segment, e-commerce, is just about the most cut throat type of business imaginable, as the competition is only a mouse-click away and the barriers to entry are virtually non-existent at this time. so a lot of cash is being burned, and will continue to be as long as WS is prepared to finance more internet IPO's. granted, the internet is great for consumers, but it has proven to be tough to make any money from it so far. i would agree with you that the plumbers will be winners in the long term as more and more companies grounded in the real world will seek to establish a presence on the internet, which should make up for some of the revenue that will be lost when the IPO pyramid scheme finally goes bust. even so, the increase in these companies' valuations over the past ten years and especially in the course of the blow-off move that started from the October lows last year is not only mind-boggling but also clearly not justifiable in terms of fundamentals like earnings growth rates and the like, even though they look great. to say that the past is irrelevant merely betrays your desire to repeat it...the '87 chart Bill referred to represented great co's like MSFT and AAPL after all, which have provided great returns to investors but nevertheless suffered 50% haircuts in the '87 calamity within two weeks. you will probably agree that it would have been better to buy MSFT after the '87 dip then right before it...which is what Bill was pointing out. actually the main lesson from '87 with regards to the tech stocks is that they didn't give a warning of what was to come, while other sectors of the market as well as bonds did. in the end all sectors were engulfed in the selling panic. luckily for the investors at the time, '87 was a mere bump in the road with hindsight . on CNBC however, guest analysts are asked "where would you put your money RIGHT NOW?" no doubt technology stocks will prove to be great investments again in the future, but why invest in them now, when they are at their most bloated valuations EVER? if you were fortunate or smart enough to buy them when they were still cheap, right now would probably be a good time to take some profits... regards, hb