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To: LindyBill who wrote (1831)	5/11/1999 10:08:00 AM
From: mauser96	Respond to of 54805

The reporter may have it backward about why the initial phase of higher interest rates hurt tech companies. As you point out companies like MSFT have plenty of cash and little need to borrow. One reason interest rates (especially long term rates) rise is because of increased demand for money, which in turn implies increased need to borrow by cyclical non tech companies who see their business turning up, and need the money for expansion. Since the market works on expectations, and since expectations were low for the cyclicals, money managers take money out of techs to chase the higher earnings surprises available in cyclicals. Of course when interest rates get high enough they kill the whole stock market.