|The controversy surrounding broadband access is nearly settled, making the availability of wider pipes in 2001 a very strong possibility.
Once this happens, a static medium will be transformed overnight into
a vibrant multimedia experience.
To trading high-tech stocks in hopes of turning a fast buck are not gone forever.
I recall something I read years ago
in J. Paul Getty's autobiography.
It seems Getty's friends were quite concerned about his financial
well-being when he began aggressively investing a large portion of his
fortune in the stock market soon after the 1929 crash. As you might
imagine, Getty's contrarian vision paid off more than a thousandfold
when the U.S. economy finally turned around.
The same opportunity exists today for the contrarian cyber-investor
that's brave enough to selectively choose great stocks in this sector
and hold on.
|DADDY, WHERE WERE YOU WHEN THE NASDAQ WAS BELOW 3000???
My thoughts on the new year.
Opportunity, Opportunity, Opportunity!!! Economic Slowdown, particularly reflected in technology shares across the board has created the investment opportunity of a lifetime for many of us. We would be wise to not let this oppotunity pass us by. Consider some recent examples of "crisis" that somehow have not derailed the appreciation of stock prices over the years.
1975: New York City appears it will financially fll into the East River. Out of nowhere, the government creates the "Muncipal Assistance Corp" and funds it with 15% municpals. End of Crisis.
Late 1980's: Savings and Loan Crisis. Citigroup is trading at $8, many of the largest money center banks trading at all time lows. The government this tine creates the Resolution Trust Corp and funds it with $500 Billion. End of Crisis.
1992: Europe. Exchange rates pegged to unrealistic levels. Answer: the currencies are allowed to flow freely and find their own levels. End of Crisis
1994: Mexico. An overwhelming budget deficit causes Mexico to ask the US for $20 Billion. We "lend them $60 Billion. End of Crisis
1998: Long Term Capital Management (LTCM) financial disaster causes potential "Liquidity crisis" worldwide. Federal Reserve engineers a consortia that puts up a $3.75 Billion stake that bails out LTCM. End of Crisis.
1999: Y2K meltdown exacerbates fears of economic disaster worldwide. Share prices plummet. The Federal Reserve cuts rates to alleviate fears. End of Crisis.
These are just a few examples. Now we have the "hard landing", "technology blowup", etc. An extended bear market? I don't think so. If history is any guide at all, the Fed and Washingtion will stimulate the economy to ultimately kickstart corporate earnings through interest rate and tax cuts. The markets, particularly in the U.S., will begin the next leg of the greatest bull market in our lifetime. We won't believe it and will wait for a pullback which won't occur. We will then wonder how we didn't see it coming.
After all, look at the recent opportunities I am sure many of us missed. March 1996, Dow 5678 and drops 9%. March 1997, Dow 7058 and drops 6%. August 1997, Dow 8259 before a 14% correction. September 1998, Dow 9300 and drops 15%. Each time the market rallied powerfully to finally it's most recent Dow high of 11,000+ and Nasdaq 5000+.
Will this happen next week or next month?? Well, if I was investing for one week or one month then I would care. However, I am investing for three to five years or more.
We have been givin another chance to invest for the LONG TERM. This is not about timing the bottom, but investing for many years and building the foundation for our families, college education and our retirements.
Those are my thoughts as to the current condition and what I expect to see happen over the next years. As always, there will be some stocks rocket we don't expect and there will be some losers we will not anticipate. However, if one builds a core of solid long term fundamentaly sound investements and a small percentage of speculative investments, the next few years will see many many happy families.