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Strategies & Market Trends : Ahh Canada - 2 out of 3 ain't bad -- Ignore unavailable to you. Want to Upgrade?

To: Shaw who wrote (1275)	3/18/2001 2:44:37 PM
From: Shaw	Read Replies (3) \| Respond to of 5144

My theory on MT and LT earnings (especially for techs), differs with probably all of you here but in a nutshell..... We have to throw out some charts, a little historical P/E evidence etc. I believe this is a fundamentally different economy than ever before. I'm a supply sider obviously, but we can see achievable growth rates in a long term low interest rate environment that we have never seen before. Technological advancements, increased productivity, world economies exploiting comparative advantages through free trade, and efficiency of capital markets all point to long term growth, imo. That said, I think anecdotal evidence is pointing out that this tech economic slowdown is very short term. A 1% ease by the Fed will see an immediate increase in cap ex, especially in the tech sector that can lead us out quickly, provide us with a clearer vision on what the future holds, and place a bottom on the techs. My reasoning for this is as follows: 1) The sudden stop of new technology buying by Fortune 500 companies. This was precipitated by the lack of vision in the economy. This will change with a Fed ease, imo. According to Ellison in the ORCL report last week they have had "many, many" 'delays' in contract closings. He stated these companies have all done their DD, are extremely happy with the product and were ready to place orders. Until it got to the BOD, that is. The BOD's are on the fence and a little worried. Altho the numbers on the DCF analysis fit perfectly, it looks like they are gun shy. A 1% decrease in rates would make the DCF look much better. These companies can't ignore these efficiencies. They will hit the button and spend. Soon, imo. If this is the case with ORCL, we can easily state it's the case with many of the others. 2) If that happens, a number of new contracts will be announced. It will be follow the leader. Increased spending will ensue. Bottom on the NAZ beginning to be set as confidence creeps in that lofty valuations haven't been a cruel joke? 3) Pre-earnings announcements will come based on the above. Positive ones for a change. 4) The bottom will have been set, nervousness in the market will have waned, and growth will continue. Earnings led growth. INTC at a P/E of 18, ORCL at 12 etc. will look mighty nice to j6P and annoying fund managers <g>. I ain't calling it a bull market in techs. Not a return to the "good old days" or what I call "bad old days" cuz of the ridiculousness, but a return to stability thru, first, price floor setting. Then things will be start to be valued on merit again, sector moves will be slowly replaced by "individual company" moves. This is something that has been exhibited throughout history when companies enter the mid inflection point of the "growth" phase of the company life curve. Sorry for the long post. All MO from reading the mountains of stuff out there on this internet thingy. Not much going on today 'cept the basketball. Wish markets were open 24/7 <g>.