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First: Don't new economy tech firms sell a large chunk of their wares to old economy firms? If
so, doesn't it follow that what is good (or bad) for the old economy firms is good (or bad) for
new economy tech firms?
Second: If I am to believe the dividend discount model (questionable as it is), the value of a
stock (tech or not) is the value of its future earnings and dividends. Those future riches are
discounted into present values using an interest rate. The higher the interest rate, the lower
the value of future earnings.
Third: None of this really matters. Adapt and adjust to the current market enviroment. If you
thought techs were wildly overvalued, by not trading them, you have missed out on some giant
profit opportunities.
My 2 cents...
Bill Bancroft
> Michael Ferguson wrote:
>
> > Good topic. My question concerns the disconnect between the nasdaq and the
> > dow/sp. It appears that the techs are flying because they do not use debt to
> > finance their growth and acquisitions. I can see how inflation and the
> > pressure on debt rates will hurt home buyers, credit card addicts, suv gas
> > bills, etc., but how or when will this apply to jdsu or nt or intc or msft?
> > These companies do not borrow to do business. So how can the fed reach them?
> > Caterpillar gets killed, but who wants to own cat with their growth
> > potential instead of the independently wealthy growth stocks?
> >
> > Hopefully someone will address this.
> >
> > Regards,
> >
> > Michael
> >
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