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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Seeker of Truth who wrote (39967)	3/4/2001 1:53:05 PM
From: Mike Buckley	Respond to of 54805

Despite what we hear lately about the virtues of conventional, non-tech stocks, they are usually not an appealing investment. They aren't as appealing for me as the dominating tech companies, Malcolm. That's because their competitive advantage isn't as sustainable or as advantageous. --Mike Buckley

To: Seeker of Truth who wrote (39967)	3/4/2001 2:03:03 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 54805

As business people we have to move proportionately to our estimated probabilities. I agree. In line with that, I would say we have probably seen the pricking of a stock bubble. Bubbles happen when assets stray too far for too long from their intrinsic values. This tends to happen when credit is easy, as has been allowed by Greenspan, with the result that many unprofitable schemes get overfunded, a/k/a MALINVESTMENT. Based on history, when a bubble corrects, assets realign with their intrinsic value, but before doing so, the market usually overshoots to the downside so that the formerly overvalued assets become undervalued. I would say, given that the Nasdaq was recently reported in the NYT to have a PE of 811 (perhaps it's down to 750 by now), that the Naz stocks are probably still overvalued in aggregate. I think it will probably get worse. (Although I expect there to be a good number of bear-market rallies, which will incite the hopeful to make predictable utterances, as in January, only to see their hopes dashed against the rocky shores of the Isle of Tough Love.) One thing I think will come out in the aftermath is the downside of all the aggressive accounting practices of many tech companies, which practices have the effect of overstating earnings. That is to say, certain stocks are not as cheap as their nominal PEs imply IMHO. I think it would be cool if tech stocks paid dividends. The ostensible reason for not paying dividends is double taxation. The real reason is, IMHO, it's a lot easier to bloat the earnings picture by telling the lemmings to pay attention to pro forma figures, than it is to pay a check to shareholders with cold hard cash, and to raise the payout on a regular basis. I doubt that'll happen, but it's a personal fantasy :) As for the particulars you bring up re: P&G, G, and C, I am not really talking particular cos. here (let alone the ones you mention), so I do not see them as relevant, much less representative, of anything I am discussing.