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Technology Stocks : PSFT - 1999: The "Make-It-or-Break-It" Year? -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (439)	4/5/1999 7:55:00 PM
From: Michael Burry	Respond to of 1274

In my entire investing life I have never seen a market as myopic as this one. Michelle and others have warned that there would likely be a Y2K lockdown. Indeed, many analysts have said the same thing. So why has the reality come as such a shock to the market? There is new information coming to play. I don't think anyone, certainly not PSFT management, expected the difficulty they've experienced in offloading their F500 sales onto new buyers. The top 1000 are pretty much saturated with what PSFT and SAP sell. As you say, everyone could see Y2K coming. New products, new markets needed. It's not just Y2K. That's the old reason in a dynamic market. Here a consideration of the psychology of falling stock prices is appropriate. A stock doesn't immediately fall to reflect new information because investors' attitudes are "sticky," to borrow an economic term. Investors don't immediately adjust expectations. So they must continually get "comfortable" with a new price level before the stock breaks lower. "Wow, cheap" "Still Cheap" "Still Cheap" "Pretty Cheap" "Wow, cheaper" "Still cheaper" "Still cheaper" "Wow, even cheaper"... and so it goes. That's what PSFT investors have been doing. I'm sure there's a contingent out there right now getting used to the $14 level. Mike

To: Chuzzlewit who wrote (439)	4/6/1999 9:38:00 AM
From: David W. Ricker	Respond to of 1274

I do think you are making the mistake of confusing stock price with business performance. You are quite correct in this assessment. It has been my fatal mistake, but what makes it worse is the business performance is beginning to reflect the stock price, something I would not have believed six months ago. This has been a hard and expensive lesson for me, and I am not sure what to do. I suppose I should have just stuck with mutual funds. I suppose at this point I could sell out and take a 2.5 year loss of about 45% or I can continue to average down. I do not have time to do a lot of research on a whole different set of investments, so I have stuck with those companies in whose products I am familiar. Unfortunately, two of those companies, SAP and PSFT have hit the fan. Oracle is in the soup too, but I sold that to buy more SAP. I guess I am one of those casual investors who have been led to the slaughter. My instinct is too hold and add. I too am disappointed with management. They certainly do not seem to care about the shareholders. Remember Duffield's goal of $40/share by 2000. Ha. I'd be happy with the mid-twenties. But I am rambling. I'd like to hold this stock for at least five years. I am half way through the five year period, I hope in the next 2.5 years or so I will realize a respectable gain. But I also realize, this is a tech stock, in 2.5 years it could be worthless. Not sure what I am going to do, continue to watch and wait I suppose.