Overpriced merchandise needs to be marked down to sell, and way overpriced merchandise needs to be marked down a lot. Given the incredible run-ups in a number of technology favorites in 1999 and early 2000, Nasdaq’s approximate 60% decline from its peak has produced precious few bargains in the high technology sector. In recent days tech stocks have bounced upward somewhat—a fairly normal occurrence after a steep drop. While it’s possible that the worst is over for tech stocks, I wouldn’t bet on it. The Nasdaq index has gone from being way, way overvalued (at 7-8 times its normal p/e ratio) to being highly valued (at 2-3 times the normal Nasdaq p/e). In any event, our success in investing is not predicated on timing the market. We’ll continue to actively research companies in various industries and to buy attractively priced stocks as we find them—just as we always have.
Apr 2001