Good Evening Sonny: How are ya? Glad to see you are back.
As far as Mr. Fleckenstein is concerned all the words, (negative or otherwise), in the World or perfunctory figures about how much of this or that GNP growth etc., Microsoft or anything else represents, is in reality, a lot of mumbo jumbo that has failed to influence the market. This is therefore of little consolation to anyone who is caught short going into a 200 point dazzler of a rally in the Dow and astounding Nasdaq leadership with near all time record breaker activity in technology stocks and new (record) highs breaking out all over in Internetland. Remember this is the area which all those 'sane' and 'mature' looking commentators on CNBC keep telling us to 'avoid' like the plague. They could not be more wrong. The fact of the matter is the shorts are on the run in most of these issues and continue to help the market higher as they have done for the majority of this record-breaking bull market run.
As some posters on this thread who receive my 'Financial Intelligence' Email report were privy to before the big rally started in earnest, I chose to take the opposite view, expecting in fact that a huge new growth wave lies dead ahead.
In all honesty, I find it very difficult to post on more than a few threads at any one time and that is why I started the 'Financial Intelligence' idea, as at least I can get the word out to some in a reasonably timely fashion.
If anyone would like to receive this 'Financial Intelligence' report please send me a private message of zap an Email to the distribution service at sage@comnet.com.mx.
Here's the report entitled:
The Next Great Growth Wave
With the dramatic re-awakening of interest in the technology sector over the past few days following the recent brutal selloff on World markets, I genuinely believe that the markets are beginning to confirm that another great growth wave still lies ahead of us.
Remember how three years ago, the launch of Windows 95 in a blaze of publicity, ushered in whole new era of computing. I believe the upcoming release of Windows 98 will inspire a repeat performance. With W 95, the first hint of trouble for status quo
W 3.1 users seeking to upgrade to the new operating system, was that they would soon run out of disk space. Next to fall by the wayside, was the 486 as having insufficient processing power to effectively handle all the new programs and multi-tasking capabilities offered by the new 32 bit Windows architecture and finally, a huge investment in extra memory would be required to seal the deal. The result: Disk drive maker stocks went through the roof and for a brief period memory makers also zoomed before an oversupply sent them crashing back to Earth. Then the Internet caught fire, sending the three major engines and beneficiaries of the Wintel Pentium Alliance and the early stage Internet era, Microsoft, Intel and Cisco systems and hordes of coat-tailers on a long and sustained growth wave.
So, now what's ahead? Well, I believe plenty more. Why? Think of it this way. In the first part of the decade, Intel's 486 was the standard. Then the new Pentium followed powering the Windows / Internet explosion. And now, we are making the transition to the Pentium II, which in of itself represents another quantum leap in computing power, that will Integrate dynamically with Windows 98 and the explosion in bandwith that Internet Phase II is about to usher in with a vengeance. Add to that the rock bottom memory prices that now abound and a formula for the next great growth wave is born. There's even more: The next generation of powerful high speed memory chips is already close to reality offering up to four gigabits of Dynamic Random Access Memory, that's over 100 times the current standard. The combination of all of this, along with ultra high definition monitors and the new Windows 98 software now enabling the use of multiple screens in a 'workstation' environment is likely to provide a computing experience as yet unimagined.
If you think the last three years saw growth, you ain't seen nothing yet. The new programs and addons that are likely to be launched coincident with this new growth wave, along with the launch of Windows 98, NT 5, improved browsers and unprecedented high speed internet access, is going to boggle the mind with a dizzying array of new choices. Why? The main reason is Moore's law economics and continuance of the computer boom that has brought us this far this fast. Simply put, this next growth wave is going to give us at least twice, if not three or four times the bang for our buck as the last one. It is going to bring unmatched affordability and power to a whole new generation of Internet and computer users that will number in the tens if not hundreds of millions. That's the domestic side. Now factor in the business side and consider the tens of millions of computers that are already beyond obsolescence and yet are still in operation out there around the World and you begin to get the picture. How many of those computers represent certifiably incompliant year 2000 junk, that will become mandatorily replaceable. How many businesses all around the World still need to get up to speed with the latest generation of programs, operating systems, Pentium II processing power and future connectivity provided by high speed secured Intranets - Millions upon millions of upgrades and outright replacements required.
As I have said many times before, in business today, if your'e not using state the art technology - your'e dead. This will only become more and more true, as we approach the turn of the century and businesses are forced to jettison their older, out of date systems.
To further illustrate the potential of this next growth wave, something extremely critical to its success began to emerge in recent weeks. A possible new standard in high-speed communications began to unfold in the form of an alliance between the nations third largest carrier, Sprint (FON), and connectivity giant Cisco Systems. This alliance could be a monopoly in the making, if they can license their technology and engineer partnerships with Worldwide Telcos that will enable them to create a air-tight lock on a whole new way of doing phone business and over communications connectivity. Their breakthrough, yet simple idea, is for one single phone line to be able to simultaneously handle multiple appliances including phones and faxes, and at the same time offer access to the Internet at up to 100 times the current speed standard. Billing for all communications access would be the same way as electricity is now charged for, but at potential savings of up to 70%. Sounds like a monumental idea, especially considering how little infrastructure alteration would be required, save adding a high speed digital packet modem type box and meter! Remember how AOL came from behind to become by far the largest Internet Provider. Frustrated with current standards, people will be beating the doors down for this service.
Sprint has effectively alerted competitors to begin developing a better technical standard, which will likely result in flurries of alliances and mergers in attempts to gain dominance.
As Michael Dell, Founder and Chairman of Dell Computer, said on CNN the other day, he strongly believes that the next ten years for Dell Computer, will make the last ten pale into insignificance. For someone who is more in tune than anyone, being right at the epicenter or ground zero of the computing explosion, I am sure he senses a coming growth wave that has in all probability been massively underestimated by many marketeers and most pundits alike. It was equally heartening to hear the Fed Chairman of all Fed Chairmen, Alan Greenspan, caution against too much Government interference in the affairs and innovations of high technology companies. I believe his comments helped to lift the pall of worry that has been overhanging the markets of late. Within a short period of him making these remarks, the market almost magically, switched gears from bearish to bullish and led by Microsoft, later joined by Intel the market just took off on this incredible buying stampede we've now witnessed these past two days. The large percentage recoveries in emerging markets and Asia augers well for the continuance of this move.
We have experienced pullbacks of a little over 10% in most of the broad indices, Nasdaq, some major stocks and somewhat less in the Dow, S&P and Oex. In just two day's we have recovered a large part of these losses and are back in the mid to upper ranges in some instances.
What is most interesting to me is that there is a lot of skepticism over the rally that started yesterday and continued so strongly today. This kind of widespread disbelief is often symptomatic of 'real' market bottoms. Also of particular note is the almost leadership strength that has been displayed by the OTC Index.
This is potentially extremely bullish for the market overall and bears out my thoughts that out-performance over the next three years may become the realm of the small caps. If we can build on these gains over the next week or two, we will in all probability see new highs in many markets and stocks sooner than most people expect. There is a risk of some sharp pull backs, but given the recent actions, I would be surprised if these pullbacks are not aggressively bought into.
A very good evening to all
Rgds
Wiz
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