From: Max More (max@maxmore.com)
Date: Thu Dec 23 1999 - 12:16:40 MST
At 10:54 AM 12/23/99 -0500, you wrote:
>The new economy could well be stable and strong over a long term, but that
>doesn't mean current hitech stock prices are reasonable. The stock market
>could crash, and the economy could hit a recession or worse for a while, even
>though the new economy continues fundamentally to get more efficient, etc.
Of course this is right. But, it does suggest that if you hold onto good
companies through short term set-backs you will do well. (It worked for me
during the downturn of summer to fall 1998). Also, I am not defending the
prices of *all* current high tech stocks, only those that I think are
actually justified. Some prices may look too high but I think some of that
is due to high p/e stocks being systematically undervalued.
Besides, I do not expect a recession of any significance. Apart from the
HBR article, a compelling case is given for a long term expansion in
Charles Kadlec's Dow 100,000 (his target for 2020--really quite modest,
historically average growth). Further support is given (up to 2008) by
Harry Dent in The Roaring 2000s, a popular presentation of the ideas that I
know you, Robin, are familiar with from The Fourth Turning.
It does make sense to look outside the USA for economies in strong
positions, or for US companies that go a lot of business in those
countries. For instance, Qualcomm will do well in China--an enormous
market. Qualcomm is a stock that many find way too expensive, but I find it
quite reasonably priced and will continue to hold it.
Onward!
Max
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