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

To: uu who wrote (8036)	3/5/1998 7:37:00 PM
From: Alok Sinha	Read Replies (1) \| Respond to of 64865

Addi, As always your posting is well thought out and well presented. I disagree with you on two points. First the reason a sell-off is not idiotic, is because buying and selling is a process via which investors with different perceptions about individual stocks and sectors are trying to establish the right price. Intel's warning is very material and relevant info towards that process There is some likelihood (maybe remote) that the slowdown being experienced by a market leader is symptomatic of more deep seated problems that other firms may experience. Investors who do not want to wait and find out, will bail out assuming the worst. So there is nothing idiotic about the sell-off. You may think it is idiotic because you have come to believe that Intel and all other tech stocks will always do well in the long run. Look at co. like Micron (regarded as bell weather DRAM co.) which traded at aboput 3 times their current price in 1995. Inspite of the market having appreciated 60% since then, they have not gone anywhere. Look at former high flyers like DEC, SYBS, NOVL, NSCP, COMS (none may be considered similar in status to INTC, but industry leaders in their segment at some point in time) which have languished. I also find your post contradictory in parts. If you do not have a "crystal ball" as you modestly admit, then you should not be able to forecast the storm with the certainty that you do. Yes the market has gotten frothy, and valuations are high by historical standards, so conservative investment strategies certainly make sense - that's all there is to it. The month prior to quarter end is typically the time companies warn - so there is more volatilitiy. Neither of these is reason to get out of the market. Your short term view may have been validated due to Intel's warning (and you will make some money on this occasion, by your success in timing the market - no doubt about that). But I doubt if this can be done consistently. Just look at all the money managers, who based on recommendations from analysts (and their judgement) are continuously changing their holdings and their cash levels all around the year. Yet have a tough time beating the market's 15 - 25% annual return. If these guys were consistently able to see "storms" and bail out and get back in at cheaper prisces, even a couple of thime in the year they could easily get 70 - 100 % returns. But it just does not happen. I am not saying that you should ignore risks esp. if you start getting uncomfortable with market moves. I would rather use risk minimizing strategies such as options to hedge my positions. If individual stocks in my holding attain levels that I think cannot be sustained based on my understanding of the fundamentals, I will sell. But this time, around, congrats on your "short term call" on the market. Regards and good luck tomorrow. Alok