To: Byron Xiao who wrote (7959 ) 3/1/1998 9:50:00 PM From: uu Read Replies (2) | Respond to
Hi Byron: I am wondering why do you think there will be a massive sell-off in the tech sector in March-April? All the economic indicators are pretty strong. Investors are just jumping back onto high tech. And NASDAQ did jump up 12.5% since beginning of the year, but that was after some massive sell off at the end of last year. People are talking about NASDAQ hitting 2000 sometime soon. I am just wondering what is your reasoning to think that we will have a sell-off? When everyone thinks in the same manner it is almost guaranteed for things to work out just the opposite! Back in Nov-Dec of last year (less than 3 months ago) when the sell off that took place in the high techs to which I kept referring to as simply idiotic , people (from the so called analysts - or as I call them con artists - to the big money managers to most individual investors) were talking about stock market falling into a never ending bear market and that the bull market was finally finished, and that the sky was falling! There was an unbeliavle pessimism toward the stock market (and especially toward the high techs). And as you recall stocks such as SUNW dropped to the $30-$31 range, MSFT to $119 (or $56 after the split), INTC to $67, and IBM to the $80 range! And all balmed the sky falling event on the Asia! psycho paths who change personality from one minute to the next! bullish sentiment is at its highest in over 6 years! My experience has proven me that when everyone (and I mean everyone ) is so optimistic about the market then it is guaranteed that the market will do horribly (in the short run anyway). Just think if everyone is 100% invested and has little cash then at some point people run out of money to buy someone else's stock! At that point some will eventually have to raise some cash! The market is a series of cash-stock transactions. If there is little cash no such transaction can take place, the same as if there is no stock such transactions will be meaningless! Because of the bullish sentiment most (if not all - at this time) are heavily invested (and as I said most are margnied heavily). When the need to raise cash come to exceed the need to buy more stocks, the sell off would start until such time that enough cash is raised for the next storm of buying. Because of the unbeliveably marginable accounts that the majority of investors hold this sell off will eventually turn into a snow ball (just like we had last October with the exception that this time the margine problem is 10 times worse than back in October!).serious matter in the short term. Most of high techs will deliver very very disappoiniting earnings this quarter IMHO. I hope I am wrong as most people at this time have come to think so. But I have a strong feeling the so called Asian flue is worse than anyone thinks. In addition to the Asian problem I also believe the Y2K problem will have a profound impact on corporate earnings (as well as spending)!at this time . It is therefore my belief that as companies start delivering their Q1 98 earnings result and/or pre announced warnings the picture perfect scenerio that most have come to develop will start to melt down. The big guys will start the selling and the marginable accounts are reluctant to sell adding the fuel to the sell off. why not take advantage of what I know - or at least believe- to be the case? The sell off that I anticipate to take place will perhaps be the last time we will see the bargain prices of the 20th century. I am not a trader (and let me be specific on this: I am not a trader ), however I do not find any logic in knowing that if I can sell high and buy low later and then sell high again (perhaps much later), then why not to take advantage of the situation?! It is the fundamental concept of investing: Buy low, Sell High ! buy low when everyone else is throwing out their shares, and sell high when everyone wants your shares. At this point in time everyone (and I mean everyone ) wants to own the stocks and the desire to own stocks is at its highest it has been in the 20th century! My logic and/or gut feeling tells me this is the time I have to sell! And in about 3 months from now when no one wants to own any stocks then that is the time I have to buy!
