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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Captain Jack who wrote (38511)	2/24/2000 9:16:00 PM
From: John F. Dowd	Read Replies (1) \| Respond to of 74651

CJ: What is your point? There is no inflation and that is the big diference between now and Volker's time which was born of the Carter days. Inflation outside of the depression has never been this low since the early days of the Industrial Revolution. AG's rate raising only harms the consumer raising his cost of buying as prices remain stable.If putting people who are getting off welfare with this robust economy back into dependency on the dole is the object of the Fed they will soon be rewarded. Of course this is the real desire of the big government Dem. Party. JFD

To: Captain Jack who wrote (38511)	2/25/2000 11:17:00 AM
From: Valley Girl	Respond to of 74651

Unlike most other posters here, I'm still in Alan's fan club. He's right to be concerned about the absurd valuations being reached in the stock market. We should be, too. I'd rather see a correction now than a total meltdown a year or two from now. I can personally attest to the wealth effect, at least here in Silicon Valley, where houses priced from $2-4 million are going for 10-20% above asking price to 20-something winners of what's lovingly called the IPO lottery. Unfortunately Greenspan doesn't have any silver bullets in his arsenal. If he did, he'd probably take a high-powered rifle to the trading floor of the Nasdaq and start picking off some of these new-economy wonders. Instead, by turning the one knob available to him, he only succeeds in sending everything on the market down by some uniform percentage. Or worse, tanking the real economy while the speculative bubble continues. In my opinion the bubble is going to have to burst under its own weight. It needs a trigger but rising interest rates won't do it. Why not? I'm guessing here, but if you assume that at some deep level stocks are valued on a discounted cash flow model, in theory higher interest rates lower the value of flows in the out-years and therefore lower the P/E. Before it's over Alan may succeed in taking some of the air out of stocks where this is actually a factor, e.g. MSFT, CSCO, etc. because they have measurable earnings streams. That in my opinion is the key; the new-economy stocks aren't trading on fundamentals and never have been. Estimates of the "big market" that awaits these comanies range very widely. Interest rates doubled? No problem, just double your market forecast, the new forecast's no more worthless than the old one. I won't believe sanity's returned until I see some of these internet stocks drop by factors of 10-100 fold. Even 50% drops in price don't impress me, we've seen those before and recovered. Meanwhile I feel for holders of solid companies like WMT and PG that are reeling from Greenspan's current brand of chemotherapy. He has to try something, but if it doesn't work soon I hope he abandons the treatment before he kills the patient.