Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Home on the range where the buffalo roam -- Ignore unavailable to you. Want to Upgrade?

To: Sig who wrote (11441)	3/12/2001 9:34:25 AM
From: stockman_scott	Respond to of 13572

Happy anniversary, Nasdaq investors By MATHEW INGRAM Globe and Mail Update Monday, March 12 <<It's not much of an anniversary present, that's for sure. A year ago this Saturday, the Nasdaq market index hit its all-time high of 5,032, and now it's close to breaking through the 2,000 level, except it's going in the wrong direction. Where it stops is anyone's guess — and even the usual gurus, such as Merrill Lynch analyst Henry Blodget and Goldman Sachs analyst Abby Joseph Cohen, have lost their air of invincibility. A year ago, Ms. Cohen (rightly or wrongly) was the patron saint of the bulls. Whenever the market got into a rough patch, she would put out a morning note to clients telling them that equities were still relatively undervalued, and the sun would break through the clouds once again. Earlier this week she put out a similar comment, and investors paid virtually no attention — after a brief respite, in fact, the selloff intensified. As for Mr. Blodget, he has gone from being the market's hero to having a special place reserved for him in the lowest circle of investment hell. It's hard to imagine that any other industry analyst has undergone such a rapid reversal of fortune, except perhaps the mining analysts who promoted Bre-X as a good long-term hold. At a recent conference, Mr. Blodget joked that he was now the rural hospital analyst for Merrill — but there are hundreds of thousands of tech investors who are less than amused. Mr. Blodget was the one who gained fame (and no doubt plenty of underwriting business) by saying Amazon would hit $400, which it did just days after he issued his report. EBay and Yahoo and other tech leaders all received similar benedictions from the analyst, as did countless of dot-com companies whose names are now irrelevant, since they have all either been bought or gone under. From their peak, even titans like Amazon and Yahoo have lost 90 per cent of their value — hundreds of billions of dollars. Not surprisingly, Mr. Blodget has lost most of his earlier value too. When technology fever was at its peak, some market watchers even dared to question the wisdom of legendary investor Warren Buffett, the so-called Sage of Omaha, a man who was once neck-and-neck with Bill Gates for the title of richest man in America. As technology soared, even seasoned market analysts began to criticize Mr. Buffett's rule against investing in technology (which the Berkshire Hathaway chairman has justified by saying he only invests in companies whose business he understands). Instead of buying Amazon or Yahoo or EBay, or trying to be the first one to get shares in a moon-shot IPO such as theglobe.com (which rose by 600 per cent its first day), Mr. Buffett continued his 40-year-old policy of investing in boring industries such as insurance and real estate. Who looks stupid now? Not Mr. Buffett — but all the new economy faithful. The people who believed the talk about technology putting an end to the business cycle, about how earnings didn't really matter anymore, about how the Internet changed everything. But it didn't stop with the dot-coms. They were the first to have reality thrust upon them, but soon the negativity spread to even the blue-chip tech stocks such as Intel and Dell and Cisco and Nortel. If a rising tide lifts all boats, a slowing economy sinks them — and so technology investors haven't even been able to rely on Microsoft or any of the other stalwarts of the industry, since they have been hit by slowing revenue and the falloff in demand for computers, and have also lost billions. If you're the type of investor who followed Warren Buffett's advice and stayed with the old reliable stocks — the mining companies and insurance companies and oil and gas — you're probably feeling quite smug. If you hitched a ride on the tech train over the past year, however, all you can see is a tunnel with no light at the end. How could all those billion-dollar dreams have vanished so quickly? And what will replace them? This is when investing gets hard. It was pretty easy in 1998 and 1999: Just buy shares in pretty well any Internet or technology company and watch your money double or triple or quadruple. Simple as that. Day-traders and hot dog vendors and cab drivers and teenagers did just as well as the professional money managers — better, in fact, because they didn't have to get over all those deeply ingrained beliefs about old-fashioned things such as fundamental value or price-to-earnings multiples. So where does the technology market go from here? Even veteran market watchers are loath to put any targets on a sector they have so consistently and catastrophically misjudged. Technical analysts say markets that have fallen so far so quickly rarely bounce back quickly, but usually struggle to climb back over a fairly long period of time. As one market watcher said, the question is not whether the Nasdaq will come back in the second half, but rather "in the second half of what year?" Does this finally mark the darkest point of the tunnel, the point of maximum pessimism, the so-called "capitulation point?" Keep your fingers crossed.>>