To me it looks like today is the end of the tech equities' downtrend..the tech buble has burst...the Nasdaq plunged to 18-month lows and is now down 54 percent from its all-time highs set on March 10 and off 42 percent for the year..Ftse techMark 100 Index from 5,753 to 2,544..thus the year 2000 starting "a spectacular popping of the new economy stock market bubble" has also been the one bursting the same buble before leaving the scene...leaving us wondering what happened or rather will happen to the new economy growth story...has the world just given up on the new economic growth?..the answer to this question and some news/analysis that didn't attract much attention because of the techs' heart-rendering screams echoing along with the sell orders going through the system...the answer is undoubtedly no, because the world can't give up on its future and the new economic growth is the future...at the beginning of the year people started buying tech equties without even thinking about valuation..at the end of the year people started selling again without even thinking about valuation...so what now?
Now is the time to appreciate both the new economic growth and valuation...the techs are the reality of our future and they will survive, pull themselves together and lead the equities race, no doubt about that...so where from here?
I think as of today the institutions will start digging in their cash piles and buying tech shares, only this time not indiscriminately...quality is going to be the most popular word around the markets for a while...just as Carsten Gerlinger, a fund manager with DG Bank in Luxembourg says:
"Traditional stocks have come down so much. I don't see the need to buy Neuer Markt stocks when I can buy Nokia cheaply...the tech bubble has burst -- but next year you have to keep an eye on quality -- on the Neuer Markt not everybody will benefit from an upturn...".
or as Schroder Salomon Smith Barney suggests in its latest forecasts for the coming year that the down move has gone far enough... "The move in government bond yields and weakness in equity markets has left the equity market looking oversold.."
Even Merrill Lynch doesn't think differently. In its forecasts for 2001 the company states that European and U.S. equities have already priced in a "hard landing" style slowdown for economic growth...
Similarly CSFB's McQuaker says:
"Since 1991, the European economy as a whole has grown at around 2 percent per annum on average. The new economy, in contrast has grown almost 4 times as fast...Given the importance growth has for longer term equity returns, we believe these differences, in themselves, give strong support to the case for investment in the new economy.."
Some commentators suggest that the shake out in the new economy in fact will lead to a stronger economic structure in the future.
Giles Keating, global strategist with CSFB in London says no differently "The agony in parts of the tech sectors is a reflection of the process of creative destruction..." thus suggesting that the shake out in the new economy in fact will lead to a stronger economic structure in the future...
That is of course another way of explaining how the institutions/manipulators grabbed the public's money...pumping in the bubble then creatively destructing it...no doubt that the destructed part is our hard-earned money...
So now that they have halved the tech equity prices, what might be their next step?
The answer in my opinion is that as of today they'll start talking about how they can't give up on new economy growth..how the cash levels are high..how the tech equity valuation looks good..how good the interest rate cut is for equities..how they expect further fall in oil prices which is already 30 percent off their highs..how attractive the telecoms sector is (after cursing the sector for a while, that's the most probable position they'll take IMHO)..and so on and on...
Mark Howdle and Niall Mcleod of Schroder Salomon already started to talk about "20 percent rise in European equities by April 2001" in a research note...for the whole year they see a rise of 26 percent by the way...
So the question now is: have you picked your techs? Only make sure they are the "quality" ones...
Thought it would be best to say this while Nasdaq was struggling to stay above 2350...
(Quotations from ftmarketwatch)
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[This message has been edited by rizgar (edited 20-12-2000).]
Now is the time to appreciate both the new economic growth and valuation...the techs are the reality of our future and they will survive, pull themselves together and lead the equities race, no doubt about that...so where from here?
I think as of today the institutions will start digging in their cash piles and buying tech shares, only this time not indiscriminately...quality is going to be the most popular word around the markets for a while...just as Carsten Gerlinger, a fund manager with DG Bank in Luxembourg says:
"Traditional stocks have come down so much. I don't see the need to buy Neuer Markt stocks when I can buy Nokia cheaply...the tech bubble has burst -- but next year you have to keep an eye on quality -- on the Neuer Markt not everybody will benefit from an upturn...".
or as Schroder Salomon Smith Barney suggests in its latest forecasts for the coming year that the down move has gone far enough... "The move in government bond yields and weakness in equity markets has left the equity market looking oversold.."
Even Merrill Lynch doesn't think differently. In its forecasts for 2001 the company states that European and U.S. equities have already priced in a "hard landing" style slowdown for economic growth...
Similarly CSFB's McQuaker says:
"Since 1991, the European economy as a whole has grown at around 2 percent per annum on average. The new economy, in contrast has grown almost 4 times as fast...Given the importance growth has for longer term equity returns, we believe these differences, in themselves, give strong support to the case for investment in the new economy.."
Some commentators suggest that the shake out in the new economy in fact will lead to a stronger economic structure in the future.
Giles Keating, global strategist with CSFB in London says no differently "The agony in parts of the tech sectors is a reflection of the process of creative destruction..." thus suggesting that the shake out in the new economy in fact will lead to a stronger economic structure in the future...
That is of course another way of explaining how the institutions/manipulators grabbed the public's money...pumping in the bubble then creatively destructing it...no doubt that the destructed part is our hard-earned money...
So now that they have halved the tech equity prices, what might be their next step?
The answer in my opinion is that as of today they'll start talking about how they can't give up on new economy growth..how the cash levels are high..how the tech equity valuation looks good..how good the interest rate cut is for equities..how they expect further fall in oil prices which is already 30 percent off their highs..how attractive the telecoms sector is (after cursing the sector for a while, that's the most probable position they'll take IMHO)..and so on and on...
Mark Howdle and Niall Mcleod of Schroder Salomon already started to talk about "20 percent rise in European equities by April 2001" in a research note...for the whole year they see a rise of 26 percent by the way...
So the question now is: have you picked your techs? Only make sure they are the "quality" ones...
Thought it would be best to say this while Nasdaq was struggling to stay above 2350...
(Quotations from ftmarketwatch)
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[This message has been edited by rizgar (edited 20-12-2000).]
