To: anon who wrote (27114 ) 12/22/2000 9:59:51 PM From: SOROS Read Replies (1) | Respond to Don't want to be a doom and gloomer, but I sold today into the rally. Maybe the cheerleaders can make people buy "anything" at "any price" again, but with a true slowdown in place, more earnings warnings coming, the automobile industry telegraphing some of what's really happening, and the Nasdaq PE at around 90 (yes, that's NINE ZERO), it seems to me that this market could go down another 40-50% when we get more warnings from companies. I used to justify the PE's with the prospects for continued HIGH growth, but wait until JDSU warns and it's finally clear that the days of 300% growth are history. Many optical stocks have made it clear that even though their products are great, no one can afford to buy them right now. Do you know how many companies have done bad financing deals in the past 3 years in order to stir up business sales? Lucent is a prime example. There are many, many more, and when the smaller companies they financed go broke or just can't pay on time, guess what happens to their earnings? One word -- WARNINGS. I don't think everyone is blind to the facts anymore. Sure there is always lots of money, but I think you will see that segment of the investor world (mutual fund only types) begin to call their mutual fund companies and financial planners after the first of the year and say, "move a couple of hundred thousand to ABC bond fund", etc. This will begin another wave of forced selling of technology stocks and others which, I believe, will take the Nasdaq down to a more rational and historical (even fairly recent) PE level of about 50. Even with this correction, what has the Nasdaq returned over the past 3 years or so -- something like 45%+ annually? How can anyone not say this is irrational? Where will stocks like EXTR, for example, be when PE's average 50? What's the PE on it now??? You get my drift. I think the market is going to be a trader's market for at least the next 6-8 months. Buying and holding may give you heart failure before long term profits. I think a lot of mutual fund holders are going to decide that trying to make 25%+ each year is not worth the stomach pains and we'll see a big movement to a more balanced portfolio all around.
