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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Ridi J who wrote (3861)	9/1/1998 8:54:00 PM
From: Anonymous	Respond to of 21876

So which is it? To make money, does one base it on "condition of the mind" or "good fundamentals"? You directly contradict yourself in back to back paragraphs. Good fundamentals and psyco-mentals are all taking it on the chin at the moment. You were referring to the following two paragraphs: << I think the last couple of days have proven that this market is moved more on the condition of the mind than on good sound financial results from companies. Seeing the Internet stocks tumble sort of confirms my belief that investing in a company's stock should be based on good fundamentals and a company's bottom line.>> I guess I don't see quite as much contradiction in what I wrote as you do. I'm sorta old in age and throughout my 40 years of working before retiring in 1995 I had been conditioned most of those years to think that one invested in a company because of good product, good management, sound business fundamentals, etc., etc., etc. Of course I didn't do much investing during my lifetime because I was busy raising a family of four daughters, paying their way through college and so forth. Plus, I wasn't making big money. Never even earned a million by myself. My first job out of high school paid 75 cents an hour or $33 a week if you throw in 4 hours on a Saturday morning with no overtime. I finished up my last full year making $62,000. It is only in the last ten years or so that I have had enough "extra" cash around to dabble in the market. And most of that dabbling is through my 401K. Looks like most of the people on this string are purchasing stock independently through brokers. I don't know if they are working through self directed IRA's or not. My perception of what has been going on in the market, especially 1996 and 1997, is that money is just being pushed into the market via retirement plans, IRA's, 401K's, annuities, and any other vehicle you can think of. The DOW curve has become a good example of what an exponential mathematical function looks like when charted. Looks good on rocket trajectory but I don't see how it can keep going with the DOW or any of the other indices. And you are right...the brokers just keep taking the incoming dollars and investing them wherever and whenever they can. They make the money...they takes their commish as the money comes in and they takes the commish as the money goes out. If most people, and supposedly there are now at least 41% of Americans in the market in some way or another as of 1997, if those people select an Index fund, a Large Cap fund, or a Small Cap fund, the people managing those funds are contractually obligated to invest those incoming dollars into stocks that fit those descriptors. The money can't just sit on the sidelines until something good happens. It has to purchase stocks. Therefore, more and more of certain stocks keep getting bought, and eventually you have P/E ratios way out of whack, not being able to rationally support the stock anymore. Such is the case of LUCENT. It is way out of whack fundamentally as per the guidelines traditionally used by the market technicians. That's all I mean. People love this company. It has been a high flyer ever since the spinoff. I never thought it would fly like this without name recognition, i.e., the parent company AT&T. But it did and it made a lot of money for me because I was completely in AT&T when the spinoff occurred, having been an employee of AT&T. I've since been morphed into a retired LUCENT employee, I had to dump my AT&T cause the rules said I couldn't keep it in my 401K anymore. I made money on that also. I just don't know if I can continue to have as much "faith" in LUCENT's high P/E at the moment. Maybe market fundamentals are going to change in the future just as anything else that isn't pure science doesn't last forever. I'll just have to wait and see. HAPPY INVESTING TO YOU! ANONYMOUS