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 : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Jan Crawley who wrote (14277)	8/21/1998 6:33:00 PM
From: Bill Harmond	Read Replies (2) \| Respond to of 164684

>>Please bulls, tell me who are the future buyers By 1994, many folks thought they had missed Dell's big move when it was trading at a split-adjusted 1 3/4.

To: Jan Crawley who wrote (14277)	8/22/1998 1:25:00 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Jan<Please bulls, tell me who are the future buyers, buyers who will be willingly to pay over $130 for just 10 to 15% of the 55 million shares> These might be the future buyers. <Little guy not likely to flee market August 22, 1998 the pros -- justifiably fretting about collapsing world currencies and economies -- are rushing to safety: out of stocks and into U.S. Treasury bonds and notes, along with other high-quality fixed instruments. But small investors -- convinced that stocks only go up -- aren't about to flee. Yesterday, the small investors again looked good -- well, sort of. After a huge early sell-off, a wave of computerized buy orders brought the Dow Jones industrial average most of the way back from steep losses, although the rest of the market didn't recover much. Early in the day, frightened market pros flooded into U.S. Treasury bonds, driving the yield down to 5.38 percent -- well below the 5.5 percent level of the short-term federal funds rate. Later in the day, the yield on the T-bond went back up to 5.46 percent, but the yield curve is still inverted (meaning that long-term rates are lower than short-term rates). In an inflationary economy, that's a sign of looming recession. In this economy, it may be another signal of looming deflation -- and certainly, sophisticated money seeking a safe haven. There are very good reasons for this flight. "The Asian thing is not going away, Russia is a disaster, and the IMF (International Monetary Fund) is broke, and the funds to replenish it may not be forthcoming," partly because of Congress's fixation on Zippergate, says James Caywood of Caywood-Scholl Capital Management. So pros may continue to seek safety in fixed instruments -- only buying the biggest blue-chip stocks (now in a 10 percent correction), while shunning the rest of the stocks (already in a bear market). The big question: Will small investors, who regularly feed equity mutual funds, start running for safety, too? Not likely, say San Diego market pros. "We handle twenty 401(k) plans," says Robert Jorgensen, a partner of Del Mar's Lockwood Pacific Group. "Less than one-half of 1 percent of 401(k) investors focus on day-to-day moves in the market, and try to time the market. "But some move (change their investment allocations) when quarterly statements come," Jorgensen adds. If the current megrims hang on, then some investors getting this quarter's statement may move out of equity funds into bond funds and money market funds, he says. The Internet investors are an unknown, Jorgensen says. "They may be reacting to the market." "You don't get massive shifts until events have discredited the asset class," and that takes a lot of trauma and a long time, says Michael Stolper of Stolper & Co. Stocks would have to go down and stay down a long time before little folks panicked, he says. "There is no reason to believe that this is anything but an intermediate decline within a long-term bull market," says Stolper. "Small investors will stay with large-capitalization liquid stocks longer than they have historically," says Neil C. Hokanson of Encinitas-based Hokanson Capital Management. If the blue chips go down 20 percent from their highs, small investors might get nervous, he says. If those big stocks give up this year's gains, then small investors will definitely start shifting to bond and money market funds, he says. Caywood believes it will take a long stretch of pain -- like the ugly 1972-1974 bear market -- to get small investors to run for safety. But "there are pockets of money out there -- people gambling with money they really want to buy a house with -- that might come out right away unless this market turns around in a week or two.">