Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Dorsey Wright & Associates. Point and Figure -- Ignore unavailable to you. Want to Upgrade?

To: Augustus Gloop who wrote (4093)	1/2/2000 8:26:00 PM
From: Ms. X	Respond to of 9427

INVESTORS' EXPECTATIONS This was in DWA's report last week and I thought it was great We got a call from one of our long time clients the other day. He mentioned that the job that is taking most of his time these days is managing investors' expectations. The other day in the Boston Globe I saw an article entitled "Investors Expectations Are Too High." I read further and came across a question an investor asked the author of the article, Kenneth Hooker. The last sentence went like this, "I would like to know where I can put the money at a low risk that will give me at least 10% to 15% return until I am 59 1-2." He's currently 58. I would like to add that when he finds this "low risk 10% to 15% return," please let me know where it is. Our government is always coming up with this crisis or that crisis that we need to throw dollars at to fix. The real crisis in America is that of investors' expectations. Some investors have been lucky enough to own Red Hat, Yahoo and various other Internet type stocks and have made tons of money. Most of these investors really have no idea how much risk they took to get those returns. Volatility is a two edged sword and once they taste the other side of this sword. I surmise that we will see some lawyers come out of the woodwork with suits involving Rule 405 NYSE. Volatility is appropriate when the stocks you own are going up, but volatility is inappropriate when the stocks you own are going down. To give you an idea of the volatility investors are taking I simply need to pull up a chart of Yahoo. I know, this is as blue chip a stock as it gets in Internet la-la land but the chart shows one solid row of X's up for over 100 points. What is Mr. Jones going to say if the stock exhales and moves down from $420 to $150? Remember AOL moving down from $179 to $79 in a matter of a few months? The point I'm getting at is the long term average return in equities is somewhere in the 10% to 11% range per annum, not 100% per annum. Who knows, maybe this type of action will continue forever? We don't have a crystal ball. There are some things you need to be aware of, however; like as the averages move to new highs the indicators are moving down. Don't lose sight of your game plan. Remember, your clients' pay you to have a plan.