Today's Wall St. Journal: Y2K Investing ...With Comments bygreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Today's WSJ front page section C article "Should Investors Buy or Sell for Y2K?" by Ruth Simon mentions the following.
1. Yardeni says don't get "obsessed" and sell everything or you'll pay a lot of capital gains taxes.
2. Some forecasters see problems with transportation, health and tech stocks and emerging markets.
3. Some believe large caps will benefit
4. Yardeni thinks mood could shift in favor of Treasuries could create a equity sell-off.
5. Morgan Stanley thinks bonds not good since Fed might loosen money to fight y2k-induced malaise.
6. Morgan Stanley sees problems with low quality munis where remediation is poor.
7. Yardeni sees possible move out of tech stocks and into consumer basics like food, drink and drugs.
There is a weird discussion about y2k remediation spending. Morgan Stanley says remediation spending is expected to be as low as one-third of initial estimates, so it will not significantly affect corporate profits. Federated Investors sees this same figure as a potential problem representing unpreparedness.
Comments by Puddintame: First, all the talk about budgeted spending is totally meaningless to me. Either the problem is fixed or it isn't fixed. If it were just a matter of spending money, each CEO would just write a check to Dogbert for $500 million and be done with it. To a large extent, analyzing budgets is a fool's game. I don't give a fish fin about the budget for the Brooklyn bridge, I just want to know if it goes from end to end. Obviously, if New York city had a budget of $10,000 for remediation, that would be a matter of concern, but these Fortune 500 remediation budgets are too large to withstand any meaningful analysis by anyone other than astute insiders.
This article has tones of how to profit on y2k. Again, I think that is a fool's game. At best, y2k will be a non-event. At worst, full Thunderdome. Now if you're the man to pick a winning stock among that set of expected outcomes, then YOU IS DE MAN! You're so smart and powerful that you're probably already sitting in a black leather throne stroking an exotic African feline and thinking of new ways to defend your compound against 007.
I do agree with Yardeni that you should think very carefully before you sell a stock that has strong earnings history and significant unrecognized capital gains. If you're like me you usually have some dogs which are yelping to be culled.
-- Puddintame (firstname.lastname@example.org), February 16, 1999
By the way, following up on last week's articles on expected inventory growth by big business stockpiling, there was a front page article today (WSJ)analyzing current inventory figures which showed no increases.
The article said there was increased production, but that it was largely snapped up by consumers, so no increase in inventory.
It remains to be seen if the increased inventory predictions will come true. Of course, everyone is going to put that investment off as long as possible. I would not expect it to show up until the last quarter. Also, remember that an inventory recession in early 2000 is still a possility even if manufacturers show no inventory increase. Consumers can "inventory" goods after the final sale in a way which will not show in the data. Either way, it means sales that will not occur in 2000.
-- Puddintame (email@example.com), February 16, 1999.
Ah - but kind sir, you must realize that ALL the Wall Street Journal is looking at here is exactly the "This article has tones of how to profit on y2k. " by staying in Wall Street and investing in "?????" message.
Make sense? They (the WSJ) are discussing places for a person who is concerned about the stock market in 2000 to invest. And, of course, invest in a place that may not lose money. Specific profiteering (like from selling dehydrated food or tapes or whatever) that is so strongly criticized elsewhere, is not referenced here.
The recommendations themselves are perhaps "a bit" pollyannish in tome: that is, if two weeks to four weeks of production are lost due to power, water, and raw material shortages, it is foolish to skip the bonds market based on a fear of "lowered intererst rates" - the stock market would have lost 20 - 30 % in that time frame, so why concern about a 1/2% loss in bond performance?
the real failure here is that these guys don't recognize that 30-50% of the value of the current market is "perceived price" driven by 401K and life insurance money investments. The real value of the stock in the stock market is about 5000 points, not 9500 points.
-- Robert A. Cook, P.E. (Kennesaw, GA) (firstname.lastname@example.org), February 16, 1999.
In case you're interested, Dr. Yardeni hosts Y2K tele-conferences at each 100 Day milestone with all sorts of interesting "players" in the Y2K arena . RealAudio of the T-500 (Global Action) and T-400 (Community Action) conferences is available at Ed Yardeni's site .
Next up (March 6) is T-300 (Contingency Planning) .
-- Mac (email@example.com), February 16, 1999.
Correction to above: T-300 is March 7, not March 6. 300 calendar days until 01/01/2000. Geez...
-- Mac (firstname.lastname@example.org), February 16, 1999.