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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Eric Wells who wrote (382)	5/22/2000 11:49:00 AM
From: Wizard	Read Replies (1) \| Respond to of 57684

Eric, >>But I think the truth is coming to light that forecasts of profits of internet firms have been greatly exaggerated. I don't disagree with you regarding many of the 'internet firms' you refer to. However, I believe I am invested in the firms where profits are entirely understated, the opposite of exaggerated. I will likely be wrong about a few but when you are right in technology stocks, it can be very rewarding. It comes down to your conviction in the oppotunity and in the management team to execute. In Q1, many core infrastructure holdings printed numbers that wouldn't be possible in anything but the early stages of a massive build-out. Regarding risk, that is why you diversify. There are 2 pieces to risk, volatility associated with the stock and business specific risk associated with the firm. The latter piece of risk can be diversified away. Its portfolio theory 101. So volatility is the risk. We know these stocks are going to be volatile. We know they are going to overshoot both ways. We might be going lower as a market from here, perhaps significantly. What I am saying is that it pays over the long run to average-into the best whenever they drop by a significant percentage. Don't leverage yourself too much so you can take the long-term view. If you absolutely need the money in the next year or two - don't buy equities. The internet is not about selling Barbecues at BBQ.com (recently out of business). Its about the business process reengineering associated with a networked economy.

To: Eric Wells who wrote (382)	5/22/2000 11:53:00 AM
From: Tom Kearney	Read Replies (3) \| Respond to of 57684

Eric - You must have a much narrower definition of Internet stock than I, and if you're talking about the stock market being down, EVERYTHING is down today, not just the Internet stocks. Almost all of my Internet stocks are making money, and their earnings are increasing fast: CHKP, ORCL, YHOO, JDSU, QCOM, JNPR, BRCM, MSFT, INTC, ITWO, etc. If anyone following an Internet strategy didn't know about risk before (most did), they do now, so you can stop talking about that one. Earlier this year I diversified some: JNJ, SBC, etc. The results were unimpressive and I decided it was a waste of time for me. Most of the criticism of technology investing 6 months ago was about the limited short term horizon such people had. Now you're complaining that we have focused on the long term to the detriment of the short term. I guess we can't do anything right! The Internet build out continues apace. I hate this drop in the market. But as Warren Buffet knows, timing markets is a folly. So, I'll stay with my wonderful businesses, thank you. Regards, Tom