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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (58967)	1/2/2000 10:20:00 PM
From: Ruffian	Read Replies (4) \| Respond to of 152472

Bearish James Grant Warns U.S. Stocks Are Overvalued: Comment Washington, Jan. 2 (Bloomberg) -- James Grant, chairman of Grant's Financial Publishing Inc., the New York-based publisher of Grant's Interest Rate Observer, said U.S. stocks generally and technology stocks in particular are overvalued -- including the fast-rising Qualcomm Inc., the Standard & Poor's 500 Index's top performer last year. Grant appeared on the ABC television program ''This Week.'' ''Technology has been evolving since the days of the telegraph. And before, the telegraph seemed as exciting as the Internet, and indeed it was. So it's important to separate the promise of technology with the occasional exuberance -- over- exuberance, indeed, manias of speculation. There is some gigantic propaganda effort by the brokerage firms of Wall Street. (Qualcomm) stock had been up 20-fold before the analyst pronounced his forecast and we were meant to be excited by the prospect of nearly 100 percent more.'' ''Technology is wondrous, but it is also perishable. By definition, there is a new technology to supplant the old. I dare say that, with $100 billion of market capitalization, the example of Qualcomm is inspiring students at MIT (Massachusetts Institute of Technology) today to do something better. And they certainly will do something more ingenious and that will supplant Qualcomm,'' he said. ''Bubbles always burst and no one ever tells you just before they do. It's not all about human progress, not all about American invincibility. One important silent partner of this great boom has been the city of Washington, D.C., and specifically the credit-creating entities of the federal government. The Federal Reserve system has been expanding credit mightily this year despite the chairman's cautionary words. Fannie Mae, Freddie Mac, the home loan banks, these institutions that facilitate real estate lending have expanded enormously. So there is a great expansion of debt in this country that is somewhat pushed in the background.'' Grant cautioned that while the U.S. seems to be the world's superpower now, it appeared just 10 years ago that Japan was poised to become the world's economic leader. ''Here's one omen we ought to pay attention to. During this past month, when the stock market was making new highs, new highs by the day, there were many, many more new lows than new highs. Which is only to say, as someone noted a moment ago, that the rise of the market has been extremely narrow and getting more so,'' Grant said. ''There is also a bubble in reverse on Wall Street at the moment. It is kind of a concave bubble, having to do with the very cheap values assigned to companies in the so-called old economies. These are companies that are by no means going out of business. They are not so retrograde as to be unaware of technology. They are employing these technologies. But if you page through Value Line, for example, you will see many, many stocks valued at less than ten times earnings. To put that in perspective, the Nasdaq (Stock Market) index about which we were talking is valued probably now at about 175 to 190 times earnings. So it is an amazing disparity. And this has often not presaged great things for investors.''