"I think they got disconnected in about 1994 or so. After all, only when you have expectations of 20 or 30% growth in already multi-billion dollar companies can you get so caught up over missing estimates by a penny or two. If you are a 5% growth story and you miss by a penny, your long term price should change maybe 50 cents. Not these 10% sell-offs that have become all too common."


agree with points you make. i think a lot of the selloffs you describe were just looking for an excuse to happen. i noticed nokia warned today and the stock was up. if the stock was trading at $20 a share instead of $12 it gets hammered on the warning.


"IMO, capitulation is close at hand. From a fundamental sense, stocks are getting cheap...especially the big names."


i think that in the late nineties there was an overuse of the indexing strategy. this pumped up the big names too much. at least some of the big names still seem very expensive to me. probably wrong but intc, csco, and msft seem like three that are examples. ibm may or may not be but there is a lot talk about accounting problems there and imo ibm is over priced. lot of talk about accounting problems at ge plus the quality of a big portion of the ge financial units loan portfolio is very low. i know youve made points about cash flow vs. bottom line earnings before so points well taken. one thing i am certain of is that investors are going to be conservative in their valuations and demand a higher risk premium now for owning stocks. lot of words to say that i think we have a ways to go in the big cap indexes on the down side.


"They are the ones that can fund at these ultra-low interest rates. I mean 10 years ago if you told any big company they could issue long-term bonds and only pay about 6.5-7% on them they would have asked where do they sign up. After all, think of what that implies. Because of taxes, that means any of these companies could go out and borrow money and pay essentially 4% on it, after tax. If you are a big company with quality products and a good distribution network, how can you go wrong? There aren't many investments a quality company can find that won't give them at least 4% return. Above 4% and they have added shareholder value. This number is so low that often companies could take on mediocre business and just get that type of return from cost of scale improvements."


these are all great points and economically are right imo. my sense is that unfortunately many ceos arent exhibiting rational economic behavior at this point. could definitely be wrong about that and would be happy to get your point of view on that.


"This is unprecendented since the 50s and people are so caught up in the busted bubble that they are looking past this. Sure you might have gotten buried buying up a dot.com or even a survivor like Yahoo when it was over 200, but if you buy up a AAA credit rated company that has access to easy capital, you have to see that times were rarely easier to build market share cheaply and position themselves for the return to a positive economy."


i would think that investors should be looking at companies that are positioning themselves well. excellent points.


"Fundamentally the investment world is ignoring things, they are caught looking the other direction."


to be honest im playin it safe. i find many securities that i feel offer excellent risk/reward parameters. ive got a fair amount of cash but ive got money working on the long side too. the securities im invested in seem almost too easy. ive spent a lot of time studying stocks the past couple of weeks and there are a lot of companies that are doing very well that seem reasonably priced.


"People will eventually get over Enronitis and the phantom double-dip recession and after a last bought of capitulation where the current trend of running out of the market into a house your really don't need for speculative purposes plays its course, the market will once again find its way. NASDAQ 4000 is likely many years off, but it will get there again someday."


the economy is in a recovery mode so the chances of a double dip recession seem small to me. the enronitis problem im afraid is a problem that is going to be with us for awhile. to me the implications as i mentioned earlier are that investors are going to be very conservative with their valuations (lower pe ratios). im more than a little surprised to see so many focused on technology. maybe at some other time ill post some opinions ive got there. if you look beyond the universe of technology stocks there is more than a few companies that are doing quite well in both top line growth and bottom line growth as well as many alternatives to growth where the yields are quite high and imo offer very favorable risk/reward parameters.