Carl: “This set of comments comes from April 17th and 18th,
2000. The NASDAQ was coming off of a
month of very heavy selling and the index went from 5,000 all the way down
towards 3,000. On April 17th and 18th
the index shot up 472 points or 14% leading many to believe that it had
bottomed. The NASDAQ closed at 3,793 on
April
18th and has been chopped in half since that time .
. .
"We're
telling people to buy tech stocks. I do
think the bottom is over. Typically,
with this kind of increase in volatility, the near-term returns tend to be
sloppy. But in 12 months, it should be just fine." -- Jeffrey Applegate,
chief investment strategist for Lehman Brothers.
"The
Ciscos, the Microsofts, the Oracles . . . those companies will weather these
kinds of storms." -- Richard A. "Rocky" Mills, branch manager at
Sutro & Co.
"We
continue to view most stocks (excluding dot-coms) as cheap, with an S&P 500
median (price-to-earnings ratio) of roughly 15 times 2000 estimates. Over the next 12 months, we believe the
Nasdaq has 200 points of downside risk and 2000 points of upside potential,
creating a ten-to one-ratio of reward to risk which makes this an opportune
time to be aggressively buying stocks." -- Thomas Galvin, chief equity
analyst at Donaldson, Lufkin & Jenrette.
"We
do feel, however, most of the damage in the technology sector has been
done. We think that we will see a
turn. We’re very close to the bottom on
this." -- Steve Wing of American Frontier Financial in Denver.
"It
certainly reaffirmed that the notion of buying the dip -- and that was some dip
-- still has some validity." --
Jim Waggoner, market and tech strategist for Sands Brothers and Co.
“ . . . My favorite out of this group goes to Thomas
Galvin's comments. He actually estimated a 10 to 1 reward ratio for the NASDAQ but had it almost completely backwards as the NASDAQ ended up dropping about 2,000 points over the next year. This has to be one of the worst predictions that I have ever seen from a well-known Wall Street analyst. I swear that I must be the only one looking at this stuff. How these guys maintain credibility and continue to appear in the media is beyond me.”
F Thanks, Carl. This is a point I’ve been trying to make
ever since The Only Investment Guide You’ll Ever Need was first
published in 1978. Not that I could do
any better than these folks. Well . . .
maybe a little better than these folks.
But in general, I sure don’t know how a company will perform in the
future relative to Wall Street’s expectations for it. And if you don’t know that, you don’t know whether it’s stock is
likely to rise or fall. It’s a tough
game (another point I’ve been trying to make for 20-odd years). Which is why incurring expenses to play it
generally makes less sense than keeping expenses to a minimum and investing
most of your stock-market money through index funds.