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 : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: wanna_bmw who wrote (85529)	7/22/2002 5:42:37 PM
From: tejek	Respond to of 275872

If the problem really is that there are few sellers and buyers, then the intervention that you are talking about will probably have to come from the government. I'm talking about a full blown nationally sponsored inspection across major industry players to resolve the fear of future corporate scandals. This would obviously be a huge undertaking, but I doubt anyone could convince the average person to reinvest into the stock market without proving to them that their next investment won't be another Enron or Worldcom. The SEC isn't big enough to investigate everyone at once. I think the government will have to help. We'll have to see if any effort like this ends up being proposed, but I wouldn't be surprised if it does happen in the short term. wbmw, in essence that is being done.......all CEOs have to sign off on their companies' audits by 14 August. Some people believe that's spooking the markets as well. ted

To: wanna_bmw who wrote (85529)	7/22/2002 5:44:12 PM
From: Joe NYC	Read Replies (1) \| Respond to of 275872

wbmw, Overstatement of earnings at some companies (Worldcomm, Enron) is just one of many components of why the market is down. There are much more fundamental reasons that no band-aid (government imposed or otherwise) can fix. The first problem is that Nasdaq at 5000 was a lunacy, based on any historical measure. There was a study that Ted and I were chuckling about on non-mod thread at about the time Naz was crossing 2500, which analyzed the earnings of the companies in the index, and based on a normal P/E multiples, the index should have been somewhere between 1,000 and 1,500. Since the time of the publication of this study, the economy slowed a bit and we had 9/11. Plus, compound this by the fact that it is not unreasonable for the index to shoot through the fair value and go below, while correcting. If you look at the charts, especially Nasdaq, if you disregard the 1995 to 2000 years, we are about where we should be. We went on a binge for those 5 years, and not many things that happened were based on reality. But unfortunately, those 5-6 years can't just be disregarded. In my teenage years, when I used to drink a lot, the morning after, I really wished I could disregard what happened the night before, but the hangover and headache ruined the day after. I think the market is now going through a bad case of hangover. I think this is what AG has been talking about every time he cautioned about the irrational exuberance. In retrospect, he should have slammed the brakes much earlier, right after the Asian currency crises was digested, or even during. It would have been easier to digest a drop back to say 1000 (where we may end up as a worse case scenario) from say 2000 of pre-Asian currency mess, or 1400 bottom than from 5000 Naz. Joe