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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Sarmad Y. Hermiz who wrote (122267)	3/31/2001 11:11:17 AM
From: 16yearcycle	Respond to of 164684

This is really amusing. Maybe it was all a conspiracy to take money out of the pockets of foreigners;>)

To: Sarmad Y. Hermiz who wrote (122267)	3/31/2001 1:03:39 PM
From: GST	Read Replies (1) \| Respond to of 164684

Sarmad: You have it backwards <With these dollars they bought stocks> I am talking about the money that we don't save -- and others do. That money -- savings -- found its way into debt obligations. We borrowed money to finance our companies and our lifestyles. The "value" of the companies may not be there, but the debt still is. The personal and corporate debt can be wiped out by bankruptcy -- or increased saving. The sovereign debt can only be wiped out by inflation -- or saving. Sorry Sarmad, we got left with the lion's share of the worthless stuff -- the equity. Did foreigners lose money? Sure. But they disproportionately put their money into debt obligations.

To: Sarmad Y. Hermiz who wrote (122267)	3/31/2001 1:04:55 PM
From: GST	Read Replies (1) \| Respond to of 164684

Sarmad: "The implication is an explosion in stock prices." I am not talking about past implications -- I want to talk about the implications for the next few years.

To: Sarmad Y. Hermiz who wrote (122267)	3/31/2001 1:27:10 PM
From: GST	Read Replies (1) \| Respond to of 164684

Sarmad: The implications for the stock economy's future direction are: Monetary policy will stay on the tight side if domestic savings do not increase. If tax cuts succeed in boosting spending (this a form of "public dis-savings" which will help maintain the trade and current account deficits at very high levels) it will push up interest rates higher to stabilize the dollar by attracting more foreign savings -- the alternative is we will have a lower dollar and import inflation (higher import prices). The surpluses Bush is planning to spend will dry-up this year and we will return to government deficit spending. This will also tend to push up interest rates as government will again be expanding the public debt, even in the face of a slowing economy. Without savings, the economy will SLOW. People who think the only issue is how to get people to SPEND do not understand how the economy works.

To: Sarmad Y. Hermiz who wrote (122267)	3/31/2001 1:41:11 PM
From: GST	Respond to of 164684

Implications for stocks: Three to five years of very weak stock prices in a troubled economy -- and lower multiples than we are seeing now. We might not have that much farther to go on the downside right now -- perhaps another 10 to 30% down from here -- but the "recovery" is likely to be pathetic and it is likely to take an eternity -- years instead of months. The "leaders" in the bubble will not make new all time highs this decade -- if ever. High-tech companies will play a far less important role in most people's portfolios -- down from the 50-60% range we saw last year and into the 30-40% range in the future. It will become harder and harder to raise equity financing and the risk premium on corporate debt will stay high which will make it very expensive for companies to borrow for expansion. Companies with poor fundamentals in terms of their balance sheets and profitability (this will include a wide range of tech stocks) will have a very tough time keeping their heads above water without new equity and with high borrowing cost. AMZN is just the tip of the iceberg -- the canary in the coal mine. Many of the "darlings" of the tech world, companies that we think of today as "solid" will find themselves on hard times. The marginal ones will be hammered year after year -- yes, even the beloved yahoo. Risky companies -- tech in general -- will lose its stock price premium and many will sell at a discount to the market -- reflecting their uncertain prospects rather than rewarding their uncertain prospects as we did in the irrationality of the bubble.