| To: Jacob Snyder who wrote (60840) | 2/22/2002 8:22:08 AM | | From: Katherine Derbyshire | | | | >>At the bottom, capital should not be available. Corporations should not be able to raise money (by selling stock, bonds, anything) to buildout infrastructure to serve any unproven market. <<
Maybe Alan Greenspan really is a genius?
That is, maybe by tightening interest rates when he did and then loosening them dramatically and rapidly, he managed to engineer a relatively soft landing. By doing that, he kept capital scarcity from becoming so severe that it strangled the recovery in its cradle.
Describing this as a soft landing is sort of a scary thought. But I think when the last speculative bubble of this magnitude broke they called it the Great Depression.
Katherine |
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| To: Katherine Derbyshire who wrote (60892) | 2/22/2002 9:10:26 AM | | From: michael97123 | | | | Katherine,
Good point. Nasdaq is only down 3300 points. Unemployment is in the 5's, not the 7's and so on. Now we have to digest and get thru the effect of enron on the value of stated earnings going forward. mike
PS A question. When does an inventory correction end or can one go on forever? With business what it is now, how can this glut still be there? I realize that there are special situations(eg fiber) with explanations but i think most folks have gotten lean and mean at every level and the first sign of robust business will have wonderful bottom line results. Go to the store--no winter goods left and so on. |
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| To: Jacob Snyder who wrote (60841) | 2/22/2002 11:44:44 AM | | From: Kirk © | | | | I'm driving through Montana on a family vacation. A Country radio station is on, volume turned up to drown out the sound of the 6 and 8-old fighting over Legos in the back seat. I ask "where is the nearest pizza place?" The car answers, "12 miles up the road, in Livingston". The 10-year-old says, "I want pineapple and bacon pizza". The car says, "You'll have to go to Billings for that, and it'll cost you 7$ more. Want directions?"
you spoil your kids. :)
When I go on trips with my lady friend with kids, we pack our own food to save money and time as well as to eat healthier. Now if we had a Star Trek replicator in the Suburban... (btw, with the money saved, we eat a nice restaurant dinner in the evenings).
Wireless web access... useful for the business professional who is on the road often and wants broadband in a $3,000 notebook PC.
Kirk |
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| To: Katherine Derbyshire who wrote (60828) | 2/22/2002 1:43:03 PM | | From: mitch-c | | | | OT - Evolution of Communication Speed
I actually wrote a grad-school paper (ca. 1994) on this subject, with an eye on business decisionmaking. In short, we've moved from an environment of fast messages with little content (heliograph, semaphore, etc) and slow messages with large content (couriers, sailing ships) to increasing both speed and payload.
The theory of constraints says *some* limiting factor remains. Until fairly modern times, the limiting factor on "good" decisions was timely information. Therefore, organizations evolved to delegate decision power to the local (geographic) level - viceroys, governors, "factors," and such. Distributed, but uncoordinated.
With the advent of mechanical and electronic communication, the speeds increased the geographic spans of decision power, and organizations responded by becoming more centralized - coordinated, but not distributed. For the first time, *too much* information became available, and it needed to be filtered - thus evolving the clerical functions of "middle management."
Now, much of that filtering can be done electronically, but the challenge of managing data saturation is a concern for *everyone* in a company, not just senior executives. Many line-level employees have to apply the judgement skills (and take the risks) that were reserved to the (now shrinking) middle-management. Conversely, risk-averse managers have a greater temptation to succumb to the sin of micro-management while sacrificing effective people-management.
My conclusion (at the time) was that organizations which emphasized trust and judgement at ALL levels were the ones that would succeed in an "information" economy. Coordination AND distribution were the keys to success.
So, how is this AMAT related? Well, I wrote that paper the year I was working (as a contractor) at Applied's Austin facility, and I was fascinated by the culture. The company basically served as the template for my conclusion. I haven't had any reason to change my assessment of the *culture* since - although the company has endured some fairly traumatic business cycles.
- Mitch |
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| To: Katherine Derbyshire who wrote (60892) | 2/22/2002 1:51:26 PM | | From: Jacob Snyder | | | | re: Maybe Alan Greenspan really is a genius?
Certainly, without the Fed's aggressive action, we would have seen the complete shutdown of the capital markets in late 2000.
In the 1800s, before there was a Fed, with completely unregulated markets, this is what happened, repeatedly. With the railroad buildout, there were repeated booms and busts. In boom times, capital was available to build parallel rail lines out to empty spots on the prairie. In bust times, no one could get any capital for anything. Even the best-run companies, run by honest people, would run out of cash with lines 90% complete.
IMO, the Fed has done little to decrease the excesses of the Bubble. By contrast, they have aggressively lowered rates and increased liquidity, to avoid a (worse) downturn. The problem with this is, it builds up Moral Hazard (rescuing decision-makers when they lose their gambles). I suppose you could argue that we'll see the Bubble deflated in steps, like a balloon with a tiny intermittent pinhole in it. But there is no historical precedent for that. The robust historical pattern, is that BigBooms (rapid buildouts financed with debt) always lead to BigBusts. And the conditions that have existed at the bottom of those BigBusts, has not happened yet. Which is why I think most of the talk about 10/01 being THE Bottom, is wishful thinking. |
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| To: John Trader who wrote (60849) | 2/22/2002 2:13:08 PM | | From: Jacob Snyder | | | | John, Michael, Maurice:
I've been on a roll, since late 2000, and made no big bad calls. But, before that, I've made some really horrible calls. Look at my posts on the WCOM thread in mid-2000. I thought WCOM was a Safe stock, a Value, at 40. I was loaded up by 30, and held all of it, all the way down to 13. So, please, don't think I'm a genius, just because my recent track record is good. I'm not.
I do everything in increments, precisely because I don't think I or anyone can call specific tops and bottoms. My AMAT sell at 50 didn't happen. But I offloaded all my TXN at 30, giving me the cash to buy back now. At some point the Bull Market will resume. Or maybe we get a Bear Rally that lasts a year, and brings the Nas (temporarily) to 3000. I spend a lot of time guessing, and post my guesses, but I am likely to be wrong a significant fraction of the time. And I change my mind a lot.
Where I am now, and Guesses-of-the-Day: At the beginning of this month, I was 35% cash. This week, a lot of buy points have been hit, in EMC, AMAT, CSCO, TXN, and CMH. As of today, I started using margin. Last October, I had posted I wouldn't start using margin until the Nas was tetesting it's October lows (1400). I'm buying more at higher levels (started using margin at Nas 1700, down from intermediate top of 2100) , because I now think we don't retest the October lows. I was very encouraged by the conference calls I listened to this earnings season. IMO, liquidity and a (modest) rebound in the fundamentals will put a floor under stocks. I expect that managements for tech companies will be cautiously guiding analysts to raise forward earnings/sales/margin expectations, and this has to be good for stocks. But war and valuations will put a ceiling on stock prices. In particular, I think our government is committed to overthrowing the Iraqi regime, a job much more difficult than the Afghan war. This can't be good for stocks. |
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| From: runes | 2/22/2002 2:40:36 PM | | | | | | OK - now we have NAS 1700 and only one week left in February.
...which also means that we have fallen back to the level that the market was at the day before 9-11. The difference is that then the economy was getting worse, now it is getting better.
....There should be good resistance at 1700 and that will (hopefully) stabilize the market. Lot of economic numbers next week but most likely these will reflect slow but steady improvement.
...The big event for semi equips will be NVLS mid quarter earnings report on the 28th (Thursday). I expect that they will reiterate that the quarter is on track, that orders have picked up enough to offset dropping deferred revenue from SAB101, and that they are still looking for the recovery to pick up by the end of the year.
...Nibble time has begun... |
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