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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: RR who wrote (6481)	2/19/2000 12:49:00 AM
From: Hank Stamper	Respond to of 24042

The Fed will continue to put the brakes on the economy until it is clear to the Fed that the inflation potential has abated. I have followed Greenspan's comments very closely over the year and this is exactly what he said. Mr. Green-EnergizerBunny-Span is gonna keep on going and going and going...... We need to ask ourselves: Why did Wally go down? Wallmart was a darling stock for years but it's on the skids on top of record earnings! Wallmart itself said that it expects the tighter labour market coupled with increased financing costs to eat into earnings in the future. The rising labour costs are exactly the "excesses" Greenspan talks about. As I wrote above, he will keep going until the excesses are cut way down. One problem the Fed and investors face is that Fed tightening takes between 6 and 12 months to work through the system to actually slow the economy. I.e, neither we nor Greenspan will be able to actually tell if the economy has been slowed for at least six months. The economy is like a big oil tanker: put the engines into reverse and you don't see the effect. When you do, you might have over done it and have to go backwards a while. The stock markets, if we recall what we should, are leading indicators. The markets will begin a bear cycle several months prior to an actual downturn in the business cycle. Another problem--alluded to above--is that in the vast majority of cases, Fed tightening has resulted in recessions. We all want soft landings but they are rare. Keep in mind that Greenspan has said his number one concern is inflation. Not deflation. We may not like this but it is the reality we must understand in order to make wise investment decisions. My opinion: "buy the dips" used to work but it is an entirely different ball game now. Now, someone will surely pipe up and write something like, "Oh here goes Todtman again going on about doom etc. He's been writing this for almost a year....". The fact is that I have been urging caution about chasing the stock upward. I was long with huge position until the middle of January when I sold every last share of JDSU in the belief that the whole picture had gone from caution to red light. We will see in time, of course--if there are another two years left in this bull then I'll be sitting in the dust. On the other hand, if buying dips won't work at this stage in the market cycle, my large cash position will buy a lot of JDSU several months down the road in the middle of a really big dip. With all good wishes and hopes for luck to everyone, David Todtman