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To: GST who wrote (134583)	11/11/2001 12:09:28 PM
From: H James Morris	Respond to of 164684

LOL! the greater fool story again.:) Btw I will play "momentum" anytime I find it, but usually it doesn't last as long as 98/99. >(Yes, "momentum" investing still is a hot game in the market. It clearly didn't die with the technology stock peak of March 2000.) But judging what is a fair stock price remains an art rather than a science. Broadcom is a case in point: On average, analysts polled by Thomson Financial/IBES expect the company to lose 33 cents a share this year and lose 13 cents a share in 2002. So investors who pay attention to fundamentals can't even figure a price-to-earnings ratio for Broadcom. If they've been buyers in recent weeks they might have based their decision on one of these expectations: * Broadcom's losses will narrow in 2002 and the company will be profitable later in the year, attracting more investors' interest. * Broadcom's long-term earnings potential is stellar, justifying a higher stock price. * Broadcom's price momentum since Sept. 21 showed a pent-up demand for the stock that could take it higher in the near term regardless of the fundamentals. Buyers who bought based on the last item listed above are merely playing the momentum game, which also is known as the greater-fool game: "I'm a fool for paying $43 a share for this stock, but there's a bigger fool out there who will pay $50 in a few weeks." In any market rally it's impossible to separate the demand that is solely momentum-based from demand that is driven by the fundamentals. One feeds the other. Yet with every new advance in this rally, the question of fundamental value will become more important. Even many momentum investors are unlikely to forget the pain inflicted on those who overpaid for technology stocks in 1999 and early-2000 and then held on. There will be limits to what sober investors will pay for stocks, even assuming the economy recovers significantly in 2002. The longer the current rally continues, the greater the likelihood that the hottest stocks will start bumping up against those limits. But many market pros argue that it's more dangerous to underestimate the potential still in the market. "Risks remain," says Sung Won Sohn, economist at Wells Fargo & Co. "However, less risk exists now than earlier this year when prices were higher and economic stimuli were limited." latimes.com