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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Bruce Brown who wrote (46391)	9/10/2001 12:38:37 PM
From: RobertHChaney	Read Replies (2) \| Respond to of 54805

Bruce - Thanks for fascinating "MarketPlayer.QuantView analysis link. It is a very interesting analysis and demonstrates why PE and other key ratios cannot be viewed historically on a stand-alone basis. Part of Buffett's teachings in the past have discussed the importance of the constant struggle for investor's funds between stocks and bonds. IMHO, most tech stocks are still overvalued and I have yet to pull the trigger on anything. However, that could change before too long. A concern I have is that the trigger decision will be very difficult when it arrives, because things will look horrible and the "mega-bear" cases will become very believable. However, if you believe the theory behind the QuantView analysis, and consider the historically low (and getting lower) inflation and interest rate environment we are currently in, it becomes difficult to believe the mega-bear scenario of a possible 7-8 PE for the S&P 500. The last times those multiples were reached was 1973-74 and 81-82 (as shown in the chart on post #46383 that Chaz was kind enough to provide us with). Clearly the inflation and interest rate scenarios, as well as other key factors seen in those recessions, were dramatically different than what we have today. So, this recession could reasonably be expected to bottom-out at a higher multiple level as the analysis suggests. Also, the Fed has more powerful weapons at its disposal to ultimately bring this one to an end than it did during those two recessions. But, I would never rule out the possibility of other major factors like massive debt defaults, etc. causing the mega-bear scenario to happen. Thanks again for the thought provoking link. Robert H. Chaney

To: Bruce Brown who wrote (46391)	9/10/2001 8:22:42 PM
From: techreports	Read Replies (1) \| Respond to of 54805

For any of you that have not read and reread Buffet's piece in Fortune entitled "Mr. Buffet and the Stock Market," (Vol 140, No 10, November 22, 1999; I could not find the link), it is a must. A few of the important points from that article follow. I think this is the article you were talking about library.northernlight.com Not much to conclude from all of that, but just commenting on what happens during the expansion phase of the business cycle and the subsequent contraction phase of the economy. It's not confined to technology stocks. The Nifty Fifty in the early 70's, the biotechnology stocks in the 1980's and of course the technology mania at the end of the 1990's. No doubt we will see a similar multiple expansion in the future of some group just as in the past. This is an important comment. For some reason, the start of a new decade (70s, 80s, 90s, 00s) the leaders of the last decade seem to collapse at the beginning of the new one. CNBC did a report on this a few weeks before year 2000. For example, the 80s were the decade of waste management companies and another industry i can't really remember. In the 90s? Waste management was the worse performing sector and that other popular sector in 1980 didn't do that great in the 90s. The 70s? Natural Resources and oil was big. The 80s proved to be a difficult time for oil. There are other examples, and it seems uncanny that now technology has hit a wall right at the begging of a new decade. btw, here's an interesting chart i've posted before. It shows the top market caps for the past 4 decades. Not much change from 69 to 89, then everything changed by 99. geocities.com EMC, NetApp unveil new top-end products news.cnet.com As I've already stated on this board, i'm fascinated with Dell Computer. The fact that their barriers are not anywhere near Microsoft or Intel's, yet they were one of the best performing stocks in the 90s. EMC also interests me. How they were able to rise to power in the 90s and beat IBM. IBM announced many EMC killers, but never effected EMC. Network Appliance is now a $3,494 billion dollar company. Will NAS disrupt SAN like built-to-order disrupted Compaq and HP? HP + Compaq: Server powerhouse enterprise.cnet.com Bottom line? HP, with the best of what Compaq has to offer, will finally be in a place to duke it out with IBM's RS/6000, AS/400, and xSeries NUMA lines, and Sun's complete product line. It also means that HP will be ready to fight it out with companies offering Microsoft .NET-based servers. With this acquisition, HP has taken a giant step forward in high-end servers and mid-range computing. It appears some feel this combo will be good. The thing is, i don't think this author has any business or investing experience. He has no idea how hard it is to merge two multi-billion dollar companies with different cultures and problems. That market, however, understands this much better? Still that said, the decline in the stock price now factors in those risks HP/CPQ has, no? Buffett: "As soon as dumb money recognizes that it is dumb money, it stops being dumb money". Everyone has recognized HP/CPQ is dumb money, so is it now good money? just some of my thoughts..