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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: awi who wrote (41484)	2/26/2000 2:58:00 PM
From: IndexTrader	Read Replies (5) \| Respond to of 99985

There has been a lot of discussion of old vs new, and I too have been trying to understand it all. I have come to the conclusion that there is a fundamental reason Wall Street has given such high valuations to the new era companies. Perhaps in its "all knowing wisdom" <gg> Wall Street knows how important innovation and technology are to our future. So tech has been given tremendous status and enormous amounts of money to innovate. This is good for all of us. But what does this mean for the old economy? The "old economy" has what the new does not--hard assets, solid earnings, products that we all use everyday and a well established place in our economy and in society. The "new" has what the old does not, as least not in excess --technology, innovation and brain power. So my conclusion is that eventually, perhaps sooner than later, we will see a coming together of old and new. The result will look (in terms of valuation) a lot like AOL/Time Warner. I have no idea who will merge with whom, but I feel certain it will happen. Perhaps HGSI will merge with AFFX and buy a chain of hospitals. Who knows. But when it does happen, the process of coming together will be quite an adjustment. Just as when two companies merge, there are issues to work out, when these economies merge, it will be pretty disruptive. Perhaps it will cause a recession, or worse, while the bugs are worked out. Valuations will have to contract. Once the process is over, my guess would be that we would have one mother of a powerful economy. Does anyone else see it this way, or am I way off base? Susan