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Technology Stocks : SAP A.G. -- Ignore unavailable to you. Want to Upgrade?

To: mauser96 who wrote (2490)	9/9/1998 11:58:00 AM
From: JRH	Respond to of 3424

<NAR> Despite professing to have a close relationship with Microsoft, SAP is steadily implementing an overarching strategy that spans rival component architectures from Microsoft and Sun Microsystems. infoworld.com JRH

To: mauser96 who wrote (2490)	9/9/1998 12:38:00 PM
From: Sam Citron	Read Replies (3) \| Respond to of 3424

Lucius, Some would say that the ability of anyone to consistently outperform the index proves that the market is not a random walk. I do not know whether Malkiel really feels that the market is a random walk, or simply used that title because it has a certain cachet in academic circles. His ability to beat the S&P to me proves that somebody with a sound understanding of the history of the stock market is far more valuable than the typical go-go 27 year old analyst or money manager. The reason that I posted the Malkiel piece was in reply to Ibexx's posting of a MSN piece suggesting that we should all pile into the safety nets of the biggest and fastest growing companies since the market is now so uncertain. In contrasting the Russell index to the S&P, it is clear that this has been the prevailing trend for quite some time. Remember, all those active money managers aren't paid to sit on cash. They have to invest in something. So why not just become closet indexers, since their performance will always be compared to the S&P anyway. At least, they wont get fired for matching the index even if the index is down. I see things a bit differently. I see Nifty Fifty predominance simply as a very late-cycle phenomenon. It indicates that investor confidence is so severely eroded that liquidity will only gravitate toward the shares of the biggest and presumably most stable companies. It is analogous to being asked to pay an exceedingly high rent for shelter in the safest building on the Outer Banks during a hurricane. If you need to be in the Outer Banks, then it may be worth the price. But if you're an individual investor and you see a possible hurricane brewing, instead of scrambling for the last deck chair on the Titanic as the music stops, why not just get the heck out? All it takes is for one timber to rattle in the form of a punk quarter, and the accumulated good will of a history of beating analysts expectations comes tumbling down. For stocks with high price-to-sales ratios, this tends to be the rule rather than the exception. (See O'Shaughnessey, "What Works on Wall Street") I don't mean to pick on SAP, which by any measure is a fine company. Nor is it a member of the S&P 500, even though it is a darling of the DAX. But it is certainly one of the premiere growth stocks of this era. All I am suggesting is that these high priced Titanics may not be as impervious to icebergs as commonly believed. Sam