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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (50670)	3/8/2000 1:03:00 AM
From: Rob S.	Read Replies (1) \| Respond to of 53903

Tech and biotech stocks have propelled to ever higher valuations: price levels never seen before in the history of the market. There are lots of theories about why this trend can or cannot continue: Bullish theories point out that American businesses continue to benefit from several beneficial mega trends including expanding world-wide markets and the geometric expansion of the "new age economy" brought on by the digital revolution and the Internet that is made possible by it. Bearish theories nag that the market has shown schizophrenic divergence between the darling "haves" and out of favor "have not" stocks: It's an extremely diverged market in which any sector that doesn't have "tech" in it's name is considered an obsolete "old world" economy company that can do nothing right while anything in one of the darling sectors can almost do no wrong. What fuels this divergence are some real world factors and some real fantasy factors IMO. The real world factors are that the "digital revolution" that many of us studied in engineering school up to decades ago has finally reached critical mass and is being multiplied by the collaborative and information efficiencies of the Internet. This has resulted in real world shifts in productivity and lowered costs that results in bottom line profits. But this also fuels other world fantasies in which the 'net effect' of geometrically empowered competitive pressures goes largely ignored and stocks continue to soar despite, in many cases, valuations based on hypothetical earnings ten years out. The market for tech stocks has boomed to such a degree that even many, if not most, bulls are shaking their heads wondering: when is the current run going to end? Of course, what fuels the speculation in stocks is the bullish growth in sales and profits and the tremendous increase in on-line stock trading. A couple years ago the number of day-traders was numbered in the tens of thousands. Now day traders number in the millions and nighttime traders number in the tens of millions. What was once a trickle is now the Amazon river, blasting away traditional ways of valuing companies and traditional ways of trading them. Conclusion: Maybe conventional ways of analyzing markets are obsolete. Enter the new paradigm: Rob S's Totally Scientific, Personal Market Mania Metrics Method of Market Timing, and quickened path to enlightenment: (The title was devised on the premise that being long and obscure intones logic and intelligence) Rob's Rule # 1] Throw out all discussions of individual valuations: we are talking high tech here so valuations are assumed to be irrelevant and already so high they are hard to fathom anyway. Rob's Rule # 2] Buy what "feels good" and what others are buying. Sell whatever the crowd has gotten tired of and quickly put the money back into a sector that is hot at the moment. Rob's Rule # 3] If you make a mistake and, heaven forbid, a stock actually goes down, don't blame yourself or spend time analyzing why, just sell after it has crashed and when it no longer "feels good" to you. Instead of taking any responsibility for your decision to buy the stock and hold onto it while it was going down, blame whoever posted the most bullish comments on SI and blame the six figures analysts who had just raised their forecasts and targets to "'somewhere north of infinity'. . . and if it gets there next week, damn it, I'll raise the targets again". Lastly, blame the Market Makers who obviously know you endearingly by your first name because they like to screw you so much. Rob's Spring to Summer Market Timing Index: or the "Tax Refund and Schools out for Summer" Timing Formula: The current rally in the tech stocks will continue at least through the beginning of this quarter's earnings period. Investors will bid up stocks to ever-higher valuations on the real prospects that semis, communications and other sector stocks will show great results. They will continue to pay attention to Rob's Rule #1: valuations, so what? Being long feels so good! But by the time earnings finally get here everyone will have mortgaged their homes and stolen their grandmas pension fund to invest in high techs. The long term will still look great but the excitement of anticipation will be spent: "buy on the rumor and sell on the news" will once again apply and the techs will take a breather. But not for long . . . The next leg up or revival will come when the public gets their tax rebates and quickly channel newfound billions into the darling tech stocks. And, of course, presidential candidate will entice our confidence by promises of huge tax cuts to come if we just "Cross my lips . . . trust me to cut your taxes". Up, up and away as we all day trade our days away! Alas, even magic spells must be broken eventually. All those wonderful hours spent trading (gaming) stocks on the Internet will sorely turn to thoughts of summer; of days hours spent by the pool or on the golf course or other activity that exercises more than your fingers. The maddening pace of stock trading will give way to the dog days of summer once again. And coincident with the slackening in active traders will be the normal seasonal decline in electronics related industries. The demographic that is most driven to trade actively will be the most inclined to cool their heals by the shade and give trading a rest. That's particularly true for highly paid brokers and institutional fund managers: these folks like their vacations and leisure time as much or more than anyone on the planet and they plan taking off in the summer when things normally slow down (just check the statistics for market trading volume during the summer months). Summary: Ride the tiger until Spring but take your profits along the way and well before "Schools out for summer". This forecast has been absolutely scientifically proven to be valid in all fifty states! ; ^)