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OK, here is the first draft of a letter to Louis Rukeyser. To those who wish to add their names at the bottom of this letter, please post replies with your suggestions for editing/revision. I'll be out of town working all of Thanksgiving week (so I can pay my AOL bill). Let's plan on sending the letter during the week of 27 November. 30 November 1995 Louis Rukeyser Wall $treet Week Maryland Public Television Owings Mills, Maryland 21117-1499 Dear Mr. Rukeyser: We, the undersigned are participants in a World Wide Web discussion group called the Silicon Investor, which has more than 2500 registered participants. We are mystified by the recent published opinions of Richard Whittington (Soundview) regarding Micron Technology, downgrading the stock without explanation two weeks after an UNCOMPROMISINGLY bullish evaluation in Barron's. We do not think that anything fundamental has changed about Micron Technology or many other tech stocks that have recently taken a beating. On 10-6-95, Investor's Business Daily published comments by Tom Kurlak of Merrill Lynch; his opinion was that Intel, Texas Instruments and Micron were still "tremendously undervalued...They could double and triple on the basis of earnings we can project near-term." Yet, about a month later, Mr. Kurlak downgraded these stocks. We suspect that this behavior on the parts of Mr. Whittington and Mr. Kurlak are more related to the "annual fall cataclysm" rather than changing fundamentals. In the October 1995 issue of Smart Money (the Wall Street Journal Magazine), James J. Cramer published an article entitled, "Unconventional Wisdom: The Big Sell-Off." Basically he contends that there is an annual fall cataclysm related to fear on the part of the mutual fund industry (fear of stumbling in the homestretch), selling to lock in gains, and associated panic: "Ultimately, this tortured cycle of professional greed and fear is why you, the individual, can score such huge long-term gains, while I, the gunslinger, must sell my best holdings with the hope that I can beat other winning managers to the punch." In Mr. Cramer's opinion, Intel and Motorola are "the Coke and Pepsi of the 90's," and Hewlett- Packard is "perhaps the world's greatest manufacturing company." However, there is also evidence that some large mutual fund managers take a longer term view regarding silicon high tech stocks: on 7 November 1995, the Boston Globe said, "As for those who fret over Magellan's big investment in technology firms, and there are many, Vinik thinks their angst is unwarranted. It is, he said, still the best place by far to find top-tier growth prospects. 'There is nothing I am hearing from companies that would have me change my heavy exposure to technology, cyclicals and financials,' said Vinik." Mr. Rukeyser, we hope to persuade you to provide a public forum on Wall $treet Week to explore some of these issues. We believe the issues are important: they relate to the extraordinary fact that we are experiencing the communication/computing/information revolution rather than reading about it in history books; to the behavior patterns of individual investors and large institutional investors; to the education of individual investors; and to the ability of individual investors to succeed. Ironically, individuals are likely to invest in the companies that make the information superhighway possible, the same highway that gives them very rapid access to a bewildering array of information, including the opinions of pundits like Whittington and Kurlak; that information can be very powerful of course, either contributing to or inhibiting panic when a stock price moves sharply but the fundamentals dhave not changed. Parenthetically, I noted the discussion of individual investing versus institutional investing in your 25th anniversary program: one panelist thought that individual investors were doomed to sucumb to the mutual fund industry, while another thought individual investing would remain viable. So, we would urge you to produce a special edition of Wall $treet Week devoted entirely to these issues. How about inviting Mr. Whittington, Mr. Kurlak, Mr. Cramer and Mr. Vinik? Instead of your usual panel of regulars, how about a format (like the 25th anniversary program) where you direct questions to these individuals? We would suggest that you consider questions from individual investors directed to these guests; as a group, we would be willing to draft questions for your consideration. We invite you to register as a participant in the Silicon Investor group, and to reply to this letter online (http://www.techstocks.com). Of course, you are welcome to reply to Daniel P. Wirt via U.S. mail, and he will post your reply online. Sincerely, Daniel P. Wirt (and many others, I hope) | ||||||||||||
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