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 : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Underwood who wrote (11967)	6/17/1998 11:44:00 AM
From: P. Ramamoorthy	Respond to of 13949

Gerry - glad to hear from you. Discussion: General market may mean different things to different people. Most people think of the DOW, although it is not as accurate as the S&P 500. A price drop of $1 in Alcoa stock can cause a major drop in the DOW because the DOW is price-weighted, whereas the S&P 500 is weighted by a stock's capitalization. For example, GE has a big share in the S&P 500 but contributes little to the DOW. NASDAQ is mainly thought of MSFT and INTC as precursors to tech sector. Russell 2000 is an indicator of the small caps. (This is my understanding.) However, we only care how y2k stocks fluctuate relative to these indicators and determine their trend. Today's gain in the DOW also lifted the tech sector. Why? In my last post I mentioned about Japan's lack of action to fix their internal financial mess. US Treasury Secretary Rubin did not volunteer to "bail out" Japan because Japan had the resources to fix the problem on their own - US dollar reserves, trade surplus, tons of US Treasury bonds and so on! (The implication is for Japan to sell the US dollar and buyback their yen). That was last Monday. The yen started sliding. Tech sector started sliding and the DOW lost 200 points or so. Greenspan's praise of the US economy went unheeded last week. Ruling out the possibility of interest rate hike did not matter any more to the market. Why? The market is more worried about earnings of multinationals in next qtr and its effect on the overall market. Today, as you must have seen in the news, both US and Japan (Bank of Japan) intervened in the currency market to stop the yen from sliding and purposely WEAKEN the US dollar. Why would Rubin weaken the US dollar? A strong dollar makes US products more expensive, decreasing sales and market share outside US. Multinationals will lose sales and earnings. On the other hand, weaker yen will make Japanese products cheaper. Toyotas and Hondas will benefit. China does not like to devalue their currency either. This intervention is good news to multinationals and more importantly to the tech stocks. CBSL, IMRS, SYNT, CRYSF, etc. all show gains. Anyone figured out why Internet stocks with no earnings are selling at the highest multiple based on future or "forward-looking" earnings whereas y2k stocks with real earnings and great momentum are beaten down? Came across the CNBC's squawk box: CEO Alsop of Progress Software was proud to announce about 125% increase in earnings. They earned 32 cents or so per sh. The stock is at 32, I recall. They sell JAVA based Internet server tools. He could not be certain about competition from MSFT and about the sales beyond 1999. On the other hand, y2k stocks like IMRS, CBSL, SEEC, COGIF, CRYSF, etc. have been announcing earnings improvement qtr after qtr. Great earnings momentum. They are using the y2k windfall revenues to expand their business beyond year 2000. Ram