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.

Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: kvkkc1 who wrote (52022)	4/22/2001 1:40:59 PM
From: Stock Farmer	Respond to of 77397

kvkkc1: Such a response deserves a detailed reply or none. Let's separate "speculative" returns such as you are talking about from "investment" returns. I fully agree that speculation defies reason. The very nature of the beast. But investing demands reason. It is in that context that I wrote to you, and in that context I reply. I suppose those who invested in the dot.com bust applied reason guessing earnings streams 10 years out like you and others attempt to do with DCF. No. You suppose wrong. Precisely the opposite. Those who speculated in dot.com bust applied bre-x reasoning. With similar upside and downside results. There is also a class of reasoning that applies to getting rich off of "unreasonable" behavior of others. The greater fool theory is not as much bunk as some would make it out to be and is the business of the venture capitalist and IPO underwriter. One just has to be careful to exit early. Finally, there is investment reasoning, which tends to forego the spectacular gains, avoid spectacular losses, and merely accrete wealth at a relentless pace. <Plus "Sometimes even a chimpanzee gets rich"> yes, another argument against your reasoning argument.> Yes... but a poorly reasoned one. Sometimes people win the lottery. Hardly a strong argument in favor of buying lottery tickets. <Plus PT Barnam's words about some of the people and some of the time.> That's about it. Some people are right some of the time. Some are right at others. Perhaps too subtle, but the point was about being fooled, not about being right. But not fooled all of the time. Which means sooner or later the wool comes off. Not sooner or later everyone is wrong. <Because reason does prevail in the market. Just that most people lack the perspective necessary to comprehend its prevailing.> I disagree. CSCO is a great example. Up nearly 50% in 2 weeks despite delivering the worst news in their short corporate history. And so many others exhibit the same pattern. Reason would have the Nasdaq 100 sliced to the predictions that bambs and NYCB have made, yet it doesn't appear headed in that direction. It may eventually get there, but it just shows that reason doesn't prevail in the marketplace.knc It is clear you disagree. Does not make you correct. The last two weeks, or any two weeks for that matter, are hardly indicative of a long-term trend. Your time frame for analysis and judgement is much too short. Watch. Wait and see. Nothing says the slicing and dicing and julien frying had to be completed by the twenty first. Another nice slicing mechanism is to find NASD at 2000 by the end of 2002, gyrating up and down and forwards and back between now and then but essentially going nowhere. Many have posted here and elsewhere that it is reasonable to expect a nice for a while. There is a lot of money still waiting to be sucked off the table. This requires a rally. We will see one. But it doesn't make CSCO a good LTBH investment. Ten years ago, a proper DCF analysis of CSCO screamed out "freakin' great buy". Because facing market potential several hundred times bigger than it had captured there was considerable growth opportunity. Similar analysis yields a completely different conclusion today. Too bad, so sad. Let's chat again in about 18 months. By which time CSCO should have made a new short term high, and returned to test and perhaps even punch through the recent lows. Probably with more violence than has been seen before, and maybe even recovered a bit... essentially flat. That's what "investment" reasoning would suggest. Meanwhile, it appears there will be tremendous opportunity for short term speculative profiteering both to the upside and to the downside. Which is what experience would suggest. So I think we are correct in our mutual perspectives, just looking in different directions. John.