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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (73653)	3/30/2001 6:23:13 PM
From: Jack T. Pearson	Read Replies (1) \| Respond to of 99985

We tend to focus on a "stock market bubble." It is interesting to consider it as an overinvestment bubble in the telecoms. The telecom bubble burst when people recognized that telecom income is insufficient to service telecom debt. --> No more money for telecoms; no orders for equipment makers; telecom debt grows; telecoms go bankrupt or get bought out for pennies on the dollar; banks end up owning the telecoms and writing off bad loans; investors end up with worthless stock. Winners: Investors who got out before prices plummeted, lawyers, users of high bandwidth communications. Losers: People who hung on to telecom stocks, telecom equipment stocks, and selected bank stocks; employees of telecom and telecom equipment companies who took stock options in place of cash wages and who lost jobs. Lower interest rates will help the telecoms, but probably not enough. I don't think it will be over until the telecoms restructure and start showing real profits--and we are probably six months to a year away from that happening.