Post of the Day
May 15, 2000
Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!
ALL THINGS CONSIDERED
This is a somewhat off topic musing about the market and stocks in general. There are some pretty smart people that frequent this board and I was just curious to some of your thoughts and whether I am severely off-base in my thoughts.
I am a firm believer that the market is going to go higher and it will do so for a while. The reason is because of the baby boomer generation. Currently the older of these sub-species are 55 with the youngest arguably somewhere around 35. They are the most prosperous generation in American history. Population/statistically I have heard that they appear like a rat going through the gut of a snake.
They will eat up social security to the point where many believe social security will be gone by the end of their tenure as senior citizens. That coupled with the standard of living that they/we are accustomed to having, they/we invest. Social security and retirement pensions are not enough. Whether it is a roth IRA, 401-K, Mutual Funds or an Ameritrade account people are investing. My wife has an aunt (62 years old) that opened her own E Trade account in the past year.
I do not believe the performance of 1999 will be repeated. Neither will the performance of November 99 to March 2000 but people will continue to invest. I read recently that during this current market correction most money managers have went to 15% cash either for redemptions or snapping up bargains. I don't believe that those redeeming funds or stocks are doing so because they are strapped for cash they are looking for the next investment opportunity.
So with all that self convincing that I am doing which areas are the best for investing???
My belief it is several areas: Technology will continue to grow. Internet infrastructure, data storage, companies providing fiber optics and wireless technology and chips. Why? because of the demand for that technology. The internet is still in an early stage. It is just beginning to improve our quality of life. It's full potential is no where near being realized. Right now it makes life convenient because you can do banking on-line, get your Yankees tickets, order books or toys and send Aunt Mary an electronic birthday card. But what is the full potential? It has not even been scratched.
Biotech and pharmaceuticals: As we all get older more and more research is being conducted to find that gene that causes cancer. Find that magic pill to cure or prevent AIDS. 10 years ago Aunt Mary in her early 50's was in great health but now she is getting older and eating pills like they were coming out of a PEZ dispenser. Uncle Joe is asking his doctor if Propecia or Rogaine is for him and if he can get of bottle of those mighty little pills called Viagra. As we get older and the baby boomers get older pharmaceutical companies are going to go higher in value.
Entertainment: Aunt Mary and Uncle Joe are finally taking that cruise to Alaska or the caribbean. They are buying the latest Disc or Tape from Disney or WB to watch or give to your kid. They are taking that trip that they always wanted to and can now do it. The rest of the baby boomers will follow.
Financial Services: The internet has allowed companies to cut cost in financial services and growth will continue. Aunt Mary and her E Trade account, or going online with Washington mutual or Citigroup to do your online banking will increase more and more. The profitability of these types of companies will go higher.
The key is to find or figure which companies will be the leaders in growth and profitability in these areas. In the latest from EMC Mr. Reuttgers mentioned that we are in the beginning of the third phase of technology waves. Each of these waves has created 10x the growth of the previous one. IT is far from over.
EMC is one of the high quality tech companies that I have and will continue to invest my $. In the words of Forrest Gump "I'm not a very smart man." But hey also I'm no dummy either. I'm in the military and I don't have a $100,000 Merrill Lynch account and won't have one no time soon but I invest regularly through various means..Monthly Mutual fund investing, DRIP investing and through an online account. I look for the best prospects for the future not what worked in the past.
I am not a technology savvy guy working on military IT infrastructure so I won't be retiring from the military and going to work for IBM, Raytheon or Lockheed Martin. I ride fast ships that go into harms way and lead the men and women that take us there. I hope to eventually become the Greeter at Walmart when I grow up and retire. Until that time I will continue to invest just like you looking for high quality companies with the hope that those companies share value will go higher over the long term.
One last thought in my ravings...Is it just me or did anyone else notice that the market dropped on April 14th. 3 days before people had the deadline to file taxes. I wonder how much from Capital gains in 1999 had to be mailed in the form of a check on April 17th?
Thanks in advance for any of your thoughts positive or negative.
|Liked this post?
Read more posts by this author.
More Recommended Posts