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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Sharp_End_Of_Drill who wrote (206)	2/23/2001 10:29:41 PM
From: upanddown	Read Replies (1) \| Respond to of 23153

Sharp I tend to agree with you that we "ain't done yet". I do wonder whether we are primed for another January-like rally in the techs. We had the huge January move followed by the huge February collapse. Market may need to catch its breath before it launches another move like January. I see a slow grinding down punctuated by brief, sharp, failed rallies while it builds the strength for anything more sustained than a day or two. Lets remember that millions of people have retreated from this market, licking their wounds and vowing "never again" while many others are ready to exit on any strength. We really don't have much in the way of historical precedent as to how the NAZ reverses a 60%+ decline. Hard to see a V-shaped recovery with this economy, especially short-term. John

To: Sharp_End_Of_Drill who wrote (206)	2/23/2001 11:33:15 PM
From: MetalTrader	Read Replies (2) \| Respond to of 23153

you've touched on two of the major issues confronting this economy/market. First the market. I think when growth investors are staring at year on year earnings contraction some are going to blow a gasket. We've watched as valuation models have mutated from the bizarre back to the traditional, but PEG is still the valuation of choice for tech investors. When the G disappears there will be another harsh reality check. Using ADCT as the poster child, even with a current pe of 10, when 2001 finally provides a negative growth to earnings, the stock is vulnerable. Granted, looking out a year, long term growth rates over 10% are easily achievable, but .... The other issue you touch on is the telecom debt issue. In looking back on previous recessions I've tried to examine the reasons this one may be different or comparable. In general, the current economy is not that bad. Inflation is not an issue like it was in '68. Nor are we coming out of an expensive war. Nor is the NG shock nearly as bad as the oil shock of '73. The one systemic issue which troubles me is the massive telecom debt underwritten last year. This debt looks increasingly difficult to service let alone pay back. Likewise these companies were responsible for the telecom equipment boom in capital spending. The economy is facing therefore credit risk both the underwriter and vendor level. In addition this cap ex engine is going to be running on fewer cylinders for a good while. Until we actually begin to see positive y-o-y comps it's going to be a bumpy ride. That is very likely not going to happen before 2002. An awful lot of techies have been vaporized so I don't see better than rational pricing for a while. mt

To: Sharp_End_Of_Drill who wrote (206)	2/24/2001 1:02:05 AM
From: JungleInvestor	Read Replies (2) \| Respond to of 23153

Angell's 60% probability of a Fed 1/2 point rate cut next week turned the market around today in spite of the continuing bad news. The Fed is behind the curve on this one. Inflation is showing up in the CRB and the latest inflation stats. Rate changes up or down take about 6 months to a year to impact. The flurry of big rate cuts IMO is going to guarantee significant inflation problems because the money supply was growing much too fast before the cutting began. Sharp, your comment on Telecom debt is very well taken. As you pointed out, this huge burden is going to cause bankruptcies and dry up spending. The result will be a stalling of a prime driver of the economy and stock market - the internet boom. Stagflation appears to be peeking over the horizon. While it is true that a slowing economy will reduce oil and gas demand, my belief is that the oilpatch boom cycle is still alive and well and has some more years to run. The article I posted earlier detailed the reduction in gas production year over year in spite of record numbers of rigs working. Low storage levels, rapidly increasing gas demand for electric generation, and high depletion rates are keeping the pendulum on the side of shortages and high gas prices (albeit not anywhere near $10/mmbtu, but more than enough to keep gas producers fat and happy). I don't believe that the recession will be deep, but it will last quite a bit longer than the first half of this year. If this is the case, demand will not fall enough to cause oil prices to tank and a very skittish OPEC will continue to cut quickly and significantly to assure that prices stay around $25 to $30/bbl. Any turmoil in the Mideast can cause these prices to soar. With these thoughts in mind, my focus is still, and right now totally, in the oil and gas arena. If my hypothesis is correct on oil and gas prices long term, then there is still a lot of money to be made in laggards - and there are a lot of good laggards out there. Of course if the markets plunge and throw my babies (e.g., SBLU, MXWL) out with the bathwater, then I'll invest accordingly.

To: Sharp_End_Of_Drill who wrote (206)	2/24/2001 5:32:29 AM
From: chowder	Read Replies (4) \| Respond to of 23153

Hi Sharp! Nice to see you over here. Am I the only one who is tired of hearing the phrase, "lack of visibility?" What is the true definition of "lack of visibility?" Is it an easy out for CEO's to sandbag future numbers? Is it a metaphor for the word "recession?" It sounds like a phrase someone in the Clinton Administration would have made up. (Couldn't resist Ed, you understand pal.) I agree with your outlook wrt market performance. I think we'll continue to see a series of sucker rallies, (today's close was probably one IMO), which the Big Boys will continue to sell into. It looks to me that the market is in the take one step forward and two steps backward mode. I believe we'll continue to follow this pattern. Other than cash, I think you short the rallies and buy the dips, concentrating on ST trades and settling for small but repeated profits. Any and all sectors are game IMO. With the slowing economy, and a falling market, perhaps it may be prudent to look at high dividend stocks as yields are sure to rise. It sure would help soften any downside. And, speaking of slowing growth, I forget which company CNBC was talking about yesterday, (JDSU I think), but they mentioned growth numbers would be slowing from 30% to 10%. If that isn't a recipe for stocks with high PEG ratios to take a fall, I don't know what is. My only short today went against me at the close, but I don't think it's time to panic, at least I hope it isn't. Shorting high PE's and high PEG ratios seems to be one way to beat the market. I wouldn't advise doing it on a large scale though. I'm playing both ways. I'm going to sail these stormy seas, but I'm wearing my life jacket in case I may be wrong. dabum

To: Sharp_End_Of_Drill who wrote (206)	2/24/2001 2:14:57 PM
From: Razorbak	Read Replies (1) \| Respond to of 23153

Krispy Kreme Doughnuts (NASDAQ:KREM) - Short Sharp: I've had KREM in my short scope for a few weeks now. Totally absurd valuation for a simple doughnut maker with limited growth opportunities... Price/Book (mrq*) = 7.81 Price/Earnings (ttm) = 79.22 Price/Sales (ttm) = 3.22 Earnings Growth for Next Year (Jan 02) = 24.8% ... but 16% of the float is already short, with a 10-day short coverage ratio (10X normal daily volume required to cover). AMZN, on the other hand, has 31% of the float short, but a short coverage ratio of only 3X normal daily volume. Summary: The fundamentals for KREM suck, but lots of short positions are already established, with significant potential for a squeeze in the S/T. If you decide to play, use tight stops. Just my two cents. Still haven't pulled the trigger, but watching closely. Razor