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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: accountclosed who wrote (30127)	4/4/1999 10:54:00 AM
From: MythMan	Read Replies (2) \| Respond to of 86076

From NY Times..Was waiting for this kind of article >>April 4, 1999 MARKET WATCH Even War Can't Shake 'What-Me-Worry?' Wall Street By GRETCHEN MORGENSON NEW YORK -- It was the subject of considerable head-scratching among investors last week that even as the Dow Jones industrial average was closing above 10,000 for the first time, an already grim situation in Kosovo was getting worse. While the euro tumbled on bulletins from the front, the Dow ended the week up 10 points, at 9,832.51. Its relative ebullience in the face of horrors overseas seemed oddly disconnected, at best. Investors seem happy to shrug off the Kosovo conflict as one that will be contained, both geographically and economically. That may be so, but this wishful thinking is but one example of how cavalier investors are today. Only when trouble hits them in the face do they react and dump stocks. Consider the data on Wednesday from the Commerce Department, which showed a growing economy producing smaller corporate profits. While the economy grew almost 4 percent last year, profits fell 2.2 percent. One might think that with the overall market trading at a rich 34 times earnings, plunging profits would frighten investors. But the Dow only hiccuped, falling 1.3 percent on the day of the news, then recovering a bit the next day. Unfailing optimism is a splendid and very American trait. It is also a result of a long bull market. If stocks rise inexorably, many believe, there's no need to sweat the details. But what many investors have forgotten is that attention to detail can sometimes signal a timely exit, before pie hits face. An example? Dell Computer, until recently a member of the stocks-that-only-go-up club. Now, after two disappointing quarters, investors are starting to question Dell's prospects; the shares are down almost 25 percent from their highs. What's been plaguing Dell's shares recently does not qualify as news. Watchful investors have known for months that Dell's dominance in the mail-order personal computer business is under attack from Compaq and IBM, which have begun selling their products directly to customers as well. And it is no mystery that the only real growth in PC sales today is among computers that sell for $1,000 or less. Dell's products carry much higher prices -- on average more than $2,000. Another case of investors with their heads in the sand involved Coca-Cola, a former highflier that is 19 percent off its recent peak. The company shocked Wall Street when it warned on Monday that first-quarter global sales would drop 1 percent to 2 percent. In the days following the news, Coca-Cola's shares fell 6.7 percent. With most of the world's economies contracting, why a sales decline surprised investors is a conundrum indeed. What would it take to make investors pay closer heed to the various straws in the wind? A series of scandals, said Richard Sylla, professor of financial and economic history at New York University's Stern School of Business. "If you get several Sunbeams and Cendants, then people may begin to say, 'This is not real,"' he said. In the meantime, investors who have kept buying stocks in the face of troubling fundamentals are likely to do some damage to the overall market when they finally head for the exits. As the handful of popular companies that are still moving up gets smaller, it grows less likely that these stocks can hold up the market averages. And unless the former favorites are replaced by other stocks with fabulous prospects, the indexes could be in for a tumble. <<