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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: JRI who wrote (40252)	1/7/2001 11:27:34 PM
From: Stephen	Respond to of 42787

JRI, I agree entirely with your premise ... and if it seemed like I was listing fundamentals ... well I guess I was.... But I guess my point was that the justification for the high P/E's was seemingly made doing an extrapolation of revenues & earnings that were growing - and I think the story is far more important than the reality. But how easy is it to believe that justification if earnings show contraction ... by 50% or more (look at INKT/CFLO & others). Any extrapolation then takes one eventually to zero growth !. Further ... if a P/E premium has been paid for tech stocks because they have been stellar growth stories ... should their P/E be less now because they have the potential to miss earnings and get cut in half ??. I don't know ... but I do know that if KO warns with a P/E of 80 then it will get a 20% haircut and probably come back. If JNPR warns I will take one heck of a hit and who knows when it will come back !!. As for tech & liquidity ... if a sector is hot and there is plenty of money floating around, then it will do well. But if tech has come to the end of its cycle, money will find another home ... one with a better story that won't disappoint the fund managers who can't afford to take 3 or four hits because those 5% of the companies they invested in warned.... and even though the rest did well they ended down for the year !!. So the bottom line is ... I really don't know. Money has to find a home somewhere ... does it have to be in tech .. I don't believe so .. not for the rest of this year anyway given that there's a chance ... chip prices/demand will be down, internet users will be flat, telecom spending will be down, wireless handset growth will be down, PC demand will be down etc etc .... and last but not least ... margins for everything will probably be down & expenses will probably be up. Now all of the above may not be the case, but I'm not prepared to bet against it... I'll be more optimistic when I see bigger money going into rather than leaving tech. Until then ... I'll be wary in the one thing I do know ... I'm at the bottom of the informational foodchain, both corporate & macro-economic. I therefore can't be comfortable doing anything that better informed people aren't doing. But ... I'm always late to a party .... Regards Stephen