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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Sir Francis Drake who wrote (23676)	6/5/1999 3:40:00 PM
From: Jill	Respond to of 74651

Thanx Morgan--what a detailed, educational post. Jill <eom>

To: Sir Francis Drake who wrote (23676)	6/5/1999 11:53:00 PM
From: t2	Read Replies (3) \| Respond to of 74651

SFD, Excellent post.

To: Sir Francis Drake who wrote (23676)	6/6/1999 8:15:00 PM
From: Sir Francis Drake	Read Replies (1) \| Respond to of 74651

Here's an article on inflation, AG & rate hikes, influence on equity markets etc.: nytimes.com <<If the Federal Reserve wants investors to start thinking a little harder about the risks they take, it is getting some results. Since the Fed's statement on May 18 that it was considering a tighter credit policy, the markets have given telltale signs that the people who buy and sell stocks and bonds feel more cautious. The most obvious evidence has been a 31 percent drop in prices of Internet stocks on the Dow Jones Internet Commerce Index, the speculative stars of the late 1990s, from their April high. Analysts say the same story is being told elsewhere -- for instance, in the bond market, where the spread in yields has widened between ultrasafe Treasury securities and riskier high-yield and international bonds. ''Investor enthusiasm has ebbed for a while,'' says Byron Wien, investment strategist at Morgan Stanley Dean Witter & Co. Or in the words of Jim Griffin at Aeltus Investment Management in Hartford, Conn., ''The new monetary bias makes the risk assessment of investment options seem more important than the calculation of potential reward. Fear is making inroads on greed.'' The ostensible cause for the Fed's change of attitude was concern that inflation might be reviving in the producing and consuming economy, as evidenced by a 0.7 percent jump in the consumer price index for April. Beyond that, though, Alan Greenspan, the central bank's chairman, has long made it plain that he keeps a close watch on inflation in securities prices as well. Two and a half years ago, he issued his famous warning about ''irrational exuberance'' on Wall Street. The new notes of caution come just as confidence has been increasing about the chances for worldwide recovery from the Asian financial crisis of the past two years. That helps explain a recent pickup in the pace of business in the United States. To some observers, a little worry about credit-tightening is a happy alternative to the deflation scare that swept through the markets last summer and fall. ''Essentially, what the market continues to do is unwind the real economic fear of last year, which motivated investors to own the safest vehicles in each asset class,'' says Greg Smith, chief investment strategist at Prudential Securities. ''For bonds, the safest vehicle was U.S. Treasuries, while in stocks investors deemed the large-cap growth stocks the safest. The world now is economically safer.'' In Smith's view, that helps encourage investors to venture into economically sensitive industrial stocks, and the shares of medium-sized and smaller companies, all but ignored in the narrow market of the past couple of years. ''We believe that the data over the next few weeks will confirm that a small amount of inflation is not a problem when examined realistically,'' he says. Economists on the Street also note that the world economy still has a long way to go to recover from the jolt it has suffered lately. In that setting, they say, it's very unlikely that the Fed would take severe steps to push interest rates higher. David Resler, chief economist at Nomura Securities International Inc., says the depressing effect of the Fed's recent jawboning on emerging-market bonds ''revealed that markets that had appeared to be functioning smoothly for several months in fact remain quite fragile and vulnerable. ''The lesson was clear: Other markets, and other countries' economies, would suffer if the base interest rate in the U.S. were raised. Surely, Fed officials were watching.'' >>