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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Bill Fischofer who wrote (62968)	11/13/2001 4:40:20 PM
From: David Howe	Read Replies (1) \| Respond to of 74651

Not to speak for the other Dave, but I think he is expecting another 50% drop from these levels. To his credit, he did call the drop that already occurred and when the Nasdaq was still above 4000 he was saying that we'd see the Nasdaq below 1000 at some point. Of course he didn't participate much on the way UP though, from what I can tell. Now, he could be right, if the economy doesn't get going again Nasdaq 1000 is possible and maybe likely. However, that's a big IF in my opinion. If the economy does heat up and gets some real momentum going we could see equity prices strengthen quite a bit, IMO. Low interest rates, good demographics, a technology revolution that's still got plenty of room to go, ever increasing productivity due to technology; all these things equate to demand for equities. I don't care how difficult it is to evaluate valuation of growth stocks, if there's more demand for them then there are sellers, they go up. $2 trillion in money markets, another $2 trillion in savings accounts and I don't know how many $trillion in bonds, that's a lot of pent up demand for equities. However, if the economy doesn't recover like equities are now predicting, look out below. IMO, Dave

To: Bill Fischofer who wrote (62968)	11/13/2001 6:05:19 PM
From: Dave	Read Replies (1) \| Respond to of 74651

A lot of stocks have seen declines of 90% or more. Just what percentage qualifies as "precipitous" in your book? I was talking less about the magnitude of percentage declines than about the speed and illiquidity than can accompany a panic. In a precipitous decline your hasty sell orders won't be filled because there won't be any buyers. Just imagine the inverse of what we saw toward the top of the bubble. Remember those wacky melt-ups where no price was too much to pay for a stock that didn't have any earnings, where the most speculative mo-mo stocks were panicking to the upside? At the bottom in a serious bear market, the kind of bear market that inevitably follows a monster bull market like the Internet Bubble, investors will fear even companies with real earnings and a healthy balance sheet. You'll see panic buying of precious metals to offset the inflation that will be caused by the hundreds of billions in wanton money printing that Congress and the Dubya Administration will resort to in order to try to "stimulate" the economy (by giving retroactive AMT credits to their biggest supporters, and bailing out floundering big companies like Enron and the airlines, for example). But equities will be the lepers of the financial world. When the markets look that bleak, in maybe another three years, I'll be buying. By the way, if you're interested in metals, I recommend Newmont Mining (NEM) because they don't hedge against gold, and they are well positioned to profit from inflation. Of course, in the off chance that rather than inflate its way out of the coming mess, the U.S. instead decides to default on its huge mounting debts, which I think is unlikely, gold could well be the very worst place to be. But I'm betting that as long as Uncle Al is around, they'll continue to print money with abandon. Dave