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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: John Koligman who wrote (50517)	7/21/2002 9:01:07 PM
From: larry	Read Replies (1) \| Respond to of 64865

John, I was 100% bullish until the early summer of 2000. Sold all my tech stocks before labor day that year. Had been very bearish since then. Right now I am turning into a little cautiously bullish and might nibble a little bit here and there beginning tomorrow, depending on the market swing. The good news in the last 6 months is that economic conditions are getting significantly better. The first Q GDP is very good, and second Q number should be decent. The earning numbers in the 2rd Q reported so far are pretty decent. The housing market is still booming. The unemployment picture is getting better. However, the economic numbers released in the last 3-4 weeks have gone decidedly weaker. Although the first Q GDP was 6.1%, it seems that for each dollar shown on the GDP report, 4-5 dollars were thrown in, which is dumb IMHO. The housing market is cool, but is likely the second biggest bubble in the human history waiting to burst. The job market actually is not getting any better, and it takes people more time to find a job. The report also shows that people are getting paid less for their new jobs. And you know, 25-30% Harvard MBA graduates in the last 3 years are currently laid off at home. If we get a double dip as I expected, the employment picture can get really murky. And the earning quality is very questionable. Sure the stock prices have gone down significantly. But the earning numbers have also come down dramatically. The valuations of most of the stocks are still high. If Coke and 3M can still trade at P/E of 35, it's very hard to argue that we are at the bottom of the biggest bear market of human history. My major concern with the market right now is: 1) A slumping dollar should force foreign investors keep pulling $$ out of our market. China, Taiwan, South Korea, Hongkong have been heavy buyers of Euros so far this year and I don't see the trend to change in the near future. 2) A slumping stock market might force more companies to go under in the near future. Although interest rate is low, big banks are unwilling to lend out to money losers. If DOW loses another 1500-2000 points, I am expecting unemployment rate to shoot up to 8% and we get a full blown recession. 3) It seems that a significant portion of the spectacular earning growth since 96 was built on creative accounting tricks adopted by US corporations, particularly tech companies. We will have more heavy weight exposure down the road and should keep shattering investor confidence. This is, IMHO, much worse than terrorist attacks. 4) The controversial US foreign policies are making us the ideal targets for terrorists and we will keep paying for it. And I don't need to mention global tension......the bottom line is, I can't see true and sustainable economic growth when the war is lurking around the corner. So I am still bearish about the economy, but believe that the stock in the long run should most likely recover. It might take us 10-20 years for the major index to get back to previous highs. I will be a buyer if we get a sharp sell off (500+ point for DOW) at the open. The NAZ has support at 1250 and 1000. The S&P does not have any meaning support until 732. And that support is also pretty weak. The next support won't be found until around 500. I think that the DOW can drop to as low as 6000 and then we begin the long and painful process of rebuilding. Actually the DOW chart looks pretty similar to that before th 87 crash. If we get a similar drop tomorrow, that will mean the DOW will go down 1800 points, NAZ around 140 points. I don't think that kind of scenario is likely to happen. But if we rally from the open, I won't be a buyer. good luck, larry