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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: High-Tech East who wrote (27313)	2/6/2000 6:31:00 PM
From: QwikSand	Read Replies (1) \| Respond to of 64865

Ken: I'm afraid you're asking the wrong guy. Here on SI, where everybody and his brother is a fountain of confident (but usually wrong) macroeconomic predictions for both the long and short term, I don't pretend to have the slightest clue. Yes, it sure looks like an unsustainable bubble to me. I don't believe there's anything really new when it comes to economics. The problem is that there are too many factors you can list on both sides of the questions of WHEN and HOW BAD it's going to pop, which is what really matters. Ask one expert (e.g., among many others, the well-known Mr. Taurus of SI) and the answer is "Monday" and "civilization ends", and has been for the last several years (except on long weekends when the markets don't trade on Monday). Ask another "expert", e.g., the Reliably Ebullient Joey Battapaglia, and productive baby boomers are pouring money into the market from the zenith of their earning potential, that inflation you think you see is a myth, productivity via cheap labor around the world is more than covering demand so we're actually in a deflationary global situation right now, innovation continues at a rapid clip, so the whole thing will go on forever. Who's right? You pick 'em. I can't, except to say that it's probably not Monday. But just for grins, I cite below two articles from today's L.A. times both of which touch on issues you brought up: bond yield anomalies and another slant on the "new economy". Neither of them represents my own opinion, but I found them interesting. Edit: call me a fuddy-duddy, but I own a lot of bonds. Regards, --QS latimes.com latimes.com

To: High-Tech East who wrote (27313)	2/7/2000 12:46:00 AM
From: nihil	Read Replies (1) \| Respond to of 64865

Calm down. Everything may be okay. I am an economist who has made a modest bundle by trading on tech stocks. Like everyone else, I was scared to death. All of the fuddy-duddies, like Friedman and Fama, tried to scare me to death about the over valued market, but I just went on like a grasshopper singing and dancing while the foresighted ants dropped out of the market and left money on the table. I watched the fed dump on the market and the bears chortle their way into bankruptcy. I figured 40 million Americans must be doing something right. I finally figured it out. My expectations as a Cisco (P/E = 100) stockholder and as a nibbler in network startups (P/E =1000 or infinite) were perfectly consistent. Everyone is expecting the same pool of future cashflows, and there is enough for all to be satisisfied, if they are allowed to gobble each other up. When Cisco swallowed Cerent last fall for $7 billion, it kept on going up. The Cerent stockholders were more than satisfied, and so were the Cisco stockholders. Neither stock was overpriced in the opinion of the market (which is, after all, the only one that you can take to the bank.) I don't think anyone who has invested and held in the major tech stocks over the past ten years has been disappointed, or they have been fantastically unlucky and ill-timed. But there are millions who invested in non-tech stocks who have been slammed. I am willing to predict that most major tech stocks will continue to grow in the coming decades because they invent and sell productivity increasing products, serve new markets, and lower cost of production in many non-tech companies. Similarly, I am willing to predict that non-tech stocks on the average will not grow nearly as much (and maybe not all all) because their markets are more nearly saturated and most of them will need to cut their costs to compete. New techs will have to have some technology that makes them more efficient than the big boys to thrive (and be taken over). All of this could be stopped, of course, if the fed tries to stop inflation originating in oil and labor shortages by jacking up interest rates and restricting credit enough to cause a general recession. None of this will directly injure the major tech companies --- none of which owe any signficant debts. Their markets are virtually guaranteed to grow eventually. Their earnings are growing rapidly. Their stocks are overvalued which makes them cheap cost-of-capital valuta to buy their overvalued competitors. For the individual investors, persistence and patience is required. In good times one needs to take profits and cut back on margin and build some cash to buy on pullbacks. In bad times there is a need to avoid panicking and selling out. There will be pull backs. There will be reluctance to sell off winners. Many will be frozen into overcommitment by overenthusiam in the highs (something for which this thread is notorious). Few will have the strength to survive one or two years of depression (like 1997-1998 in chips). But if there anything that we can know it is that tech stocks will prevail -- not all of them of course -- and the course will not be steadily up. But as stocks near their trend tops, pull back, a little bit, or sell calls, and be prepared to re-enter at the bottoms of the channel.

To: High-Tech East who wrote (27313)	2/7/2000 4:54:00 AM
From: JDN	Read Replies (1) \| Respond to of 64865

Dear HT: THAT is a prime example of how NEWS is SOLD. Create a problem!! There are so many inaccuracies in that article I will not even address them. Just a couple comments: 1. To address your question, why are Techs going up if rates are going up. No less a personality than Mr. Greenspan himself explained that. Technology is REDUCING COSTS. No matter what the cost of the technology IF it reduces costs to such an extent that it results in a rapid payback of dollars expended to acquire it, that technology will be purchased. 2. The GREAT DEPRESSION was caused MAINLY because of Nationalism resulting in MANY TRADE BARRIERS effectively limiting free trade. I do happen to agree that there is a danger of raising the interest rates too high. Personally, I think Mr. Greenspan must adhere to that feeling also, which is why he is taking such small baby steps. It takes a long time for the effects of rising interest rates to wind there way through the economy, now that its Global even longer perhaps. At least by taking tiny little steps at a time they MIGHT be able to recorrect any errors they make in time. I dont know. I do know, that since the 1920's economic KNOWLEDGE is must better known and understood, and communication is such that they get answers much faster than in the past. The bottom line is this, dont believe everything you read. JDN