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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Stock Farmer who wrote (2902)	4/6/2001 2:16:10 PM
From: Monty Lenard	Respond to of 74559

What is "Fair Market Value" LOL, it is what it is at the moment. A fluid value/situation...changes moment by moment. Monty

To: Stock Farmer who wrote (2902)	4/13/2001 2:33:12 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 74559

I think you're right about the bubble being mainly in the Nas, and a few other big caps like KO. Lots of Old Economy small and mid-caps, peaked in early 1998, and then after October 1998, they never regained their old highs. My largest stock holding is CMH, a mobile home builder. I accumulated it in the summer of 2000, when it was at a single-digit PE. Pays a dividend, buys back stock regularly, doesn't do Creative Accounting. Average cost 8.1, now at 12. No bubble in stocks like that. However, I think the pain will spread. The Nas fell off a cliff first, but that was because the first stage in the economic downturn was a shutoff of credit to companies with untenable business plans, and a downturn in business spending. The next stage, IMO, is an equally severe downturn in consumer spending. With unemployment rising, and the UnWealth Effect, and consumer debt levels currently at historic highs, I don't see how we can escape a very sharp downturn in consumer spending. I see consumer confidence falling into the 60s or 50s, and year-over-year consumer spending being negative for 2-3 quarters. And I'm coming around to agreeing with those who say the Fed isn't going to be able to stimulate demand. When someone is carrying a credit card debt equal to their yearly income, and they get fired, lower Fed Funds rates don't help much. When a telco startup's cash flow is inadequate to service its debts, lower Fed Funds rates don't help much. I just sent the IRS the biggest check I've ever written, from when I sold all my longterm tech holdings in January 2000. I expect to be buying back tech, at some point. I bought some tech last summer, when I thought we were going to get a soft landing. I was wrong, and I paid for it. Now, I'm prepared to be very very patient. We are nowhere near the bottom in the fundamentals. Even if stocks lead the fundamentals by 6 months or so, we are still not near a bottom in stocks. But, I recognise that the above is a guess, and I could easily be wrong. So, I'm taking a "show me" attitude towards the recovery in the economy. That is, I will deliberately give up the first big move off the bottom in stocks, to be sure I don't get back in too early. I need to see a variety of indicators up for a couple of consecutive months, before I go back to doing what worked so well from 1996-1999 (buying out-of-the-money LEAPs in techs): 1. consumer confidence up 2. consumer spending up 3. bookings for semi-equips up I don't really feel comfortable putting money into a sector (long or short) until I've studied it for a year or two, so I don't know which non-tech areas are going to get whacked when consumer confidence and spending collapse. However, I think there are still some techs that are pricing in a rosy future that is highly unlikely to happen. Yesterday, at the close, I took a large position in NVLS puts. This is a semi-equip, that is at a valuation far above the 1996 and 1998 trough levels. Business conditions, IMO, are likely to trough at levels worse than in those last 2 downturns. Strong resistance at 48 for NVLS.