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Technology Stocks : Y2k Denial on SI -- Ignore unavailable to you. Want to Upgrade?

To: Stephen Smith who wrote (89)	7/26/1998 1:38:00 AM
From: Wizzer	Read Replies (1) \| Respond to of 151

Perhaps, this may explain at least my "Doom and Gloom" opinion on what will happen. As I gain some experience in the stock market, I have become painfully aware that a little "panic" selling can cause a lot of "panic" selling. People don't need an excuse or a legitimate reason to panic, but they do. For example, the Asia crisis caused companies that have little or nothing to do with Asia to suffer in stock price. Why?? Because at the very most, no matter how much investors feel they are knowledgeable, well-informed, and advanced, they act with a "mob mentality". They see someone selling or buying and they follow suit because they feel that those people know something they do not. Even the "rational" investor often falls into this mode of behaviour. Investors are also becoming increasingly aware that many company's earnings are suffering, there are many over-valued companies, there are higher P/E ratios than ever before, etc..... Now, hypothetically, as the year 2000 approaches, we begin to see: 1) the regular October drop in the market 2) end of year tax selling approaching 3) an unknown number of investors selling due to fear of the unknown in 2000 This new factor (3), along with the typical factors, will cause some "panic selling" to occur as stock market indexes begin to drop, let alone if the Y2K problem either happens or it does not. Investors will want to preserve their wealth, and life savings as many households have a lot riding on the health of the stock market. I heard over 60% of American Households are invested in the stock market somehow. The "ripple effect" on the market will be tremendous as many more sellers will appear, and the buyers will have the edge. Stephen, imagine if this was happening, would you maintain a "cool head" and hold on to your stock as the market and your personal portfolio was suffering knowing that the Y2K problem was solvable, or would you sell before you lost more money and look for an opportunity to buy back at cheaper prices? Many investors will not be waiting until New Year's 1999. It's the fear of WHAT MAY HAPPEN months in advance, that will cause the problem, not actually whether it will or won't occur. The unknown element of the infamous Y2K problem will be enough for many to sell. Rational investors will follow suit, and those with money on hand will be waiting and buying up stock like crazy. This is not "doom and gloom" talk, but more of a behavioural analysis of what the human beings invested in the stock market may do.