Stockholders revolt has been a little quiet
lately (maybe he is busy covering his margin calls).
About two months ago, we engaged in a brief debate, an
I am going to provide an update. On March 20, I
stated that "the Nasdaq is ridiculously overvalued", and
"the dow will not lose anywhere near what the nasdaq
loses". StockholderRevolt, in a response that was very
hard to follow (I do not think logic is his/her
forte), compared me to a chicken little who always thinks
the sky is falling.
Since March 27, the Nasdaq
is down 27%, while the Dow is down around 1%. Any
comments now Mr Revolt????????
One other comment -
I did something I have never done before - I dumped
my position in NPK after reading the letter to the
shareholders in the annual report. I think I sold around 33
1/4 (the stock jumped up around a point on the day I
sold, which is typical).
After reading the
letter to the shareholders, I realized that although on
paper NPK offers a compelling value, I did not have
enough confidence in management to invest money with
this company. I found their letter to be petty and
ridiculous. They actually blamed many of their problems on
the study that was published regarding NPK's lack of
attention to shareholder value. If a management team cannot
present themselves in a reasonably capable light in an
annual report, where they are in complete control of the
environment, then in my view you are dealing with incapable
people. Clearly others have reached the same conclusion,
or why else would this company be trading at below
net cash value. It takes a tremendous amount of
negative input from management to create such a
To all of those who are still long (which includes
my parents), I wish you the best and I genuinely
hope that a catalyst of some kind creates a more
realistic stock price for this company. Who knows, if it
gets low enough I may not be able to resist nibbling
again in the future.
statements clearly your view that the MARKET was heading for
a collapse. In fact, that has not
It hasn't?? The Nasdaq is now down almost 50% from
its high in March. That does not constitute a
collapse to you?? What would it take - a drop of 95%? Give
me a break!!
And for the record, even in this
statement you twisted my meaning. I predicted the Nasdaq
was headed for a tumble, since it is so dominated by
high tech companies that were so overvalued last
March. As to the rest of the market, I predicted that
the Dow would probably hold up well, since it
primarily made up of old economy stocks, which were much
more reasonably valued.
I just reread my post
of 3/20 one more time - I cant read it enough. What
The Nasdaq was not overvalued, some stocks were?
That is your great insight into the discussion.
Well....Duh!!! Maybe, since it is down around 42% since my 3/20
post, a few more stocks were overvalued than
undervalued. Come to think of it, that was my point in the
first place. Hello - Stockholderrevolt - are you
As for long term versus short term
forecasts, it was a long term forecast because I stick with
my original point (again on 3/20) that no one can
accurately predict short term market movements. The fact
that it came true so quickly is a bonus.
for Biogen, why would you assume that my original
purchases were for more than 55? Biogen has spent 95% of
its public life at prices below 55, but for sake of
the arguement you assume I just happened to purchase
mine during that brief time that it was over 55.
Another one of your illogical, and incorrect assumptions.
I am a long term investor, and originally purchased
Biogen in 10/97 at a split adjusted basis of around
16.5. Good try though.
Maybe your just mad that
you did not listen to me. Best of luck in the future
- it will come back eventually. And, as long as you
are not invested on margin, you can wait it
Hang tough - FiveHawksters
A few months ago Fivehawksters engaged me in a
debate about the near-term future of the NASDAQ
Composite and the Dow Industrials. He puffed himself up
with the following statements. On March 20, he stated
that "the Nasdaq is ridiculously overvalued", and "the
Dow will not lose anywhere near what the nasdaq
I compared Fivehawksters to Chicken
Little, who always thinks the sky is
Following our original exchange the Nasdaq dropped about
27%, hitting bottom on May 23, then posting an
impressive rebound. Meanwhile, the Dow has edged down all
And where are the two averages today?
Well, they are both down a few percent year-to-date.
The NASDAQ has rebounded and the Dow has continued to
Fivehawksters, you are still full of
Have not checked
on board in quite some time, I have been laughing my
ass off at some of your previous posts. Naturally, my
favorite was your September 24 post:
"A few months
ago Fivehawsters engaged me in a debate about the
near term future of the Nasdaq Composite and the Dow
Industrials. He puffed himself up with the following
statements. On March 20, he stated that "the Nasdaq is
ridiculouosly overvalued" and "the Dow will not lose anywhere
near what the Nasdaq loses"."
Fivehawksters to Chicken Little, who always thinks the sky is
And you had a strong finish - "FiveHawksters, you are
still full of crap!".
Stockholderrevolt. Lets get a current update.
Since my post
of March 20, the Nasdaq has fallen from 4610 to
2880, a loss of 37.5% (after a significant recovery
last Friday). During that same period, the Dow has
fallen from 10,631 to 10,546, a loss of 1.2%. There is
not a serious financial commentator who now does not
acknowledge that the Nasdaq was very overvalued during the
Spring, many have used the term "bubble" to describe the
market at that time. Sadly, these types of market
conditions are usually only apparrent to most market
participants (such as yourself) after the fact, resulting in
significant losses of capital.
Since you have been
such an antagonist, I will also tell you that I have
had an outstanding year this year, because I
completely ignored the highflighers in the Spring. I have
recently begun to move some of my assets into the growth
sector (admittedly a little early in some
It did not make me a chicken little to observe what
I thought was a very obvious market condition in
the Spring, and I am much better off financially for
it. To be successful in the market you must be
capable of independent thought, and not always go with
the prevailing wisdom.
Be a man and admit you
were wrong, we will all respect you more for it.
Alternatively, you could do an Al Gore imitation and continue to
fight in spite of what the crystal clear facts are
Respectfully - FiveHawksters
I admire the insights that
you provide when we discuss NPK, among other stocks.
I also hate hearing from Chicken Little types who
predict the sky is falling, as you mention in your note
However, fivehawskters may
have been right on March 20. The NASDAQ closed at 4600
or so that day. It's now down to 3767. The DJIA
closed at 10680 on that day while it is actually up a
little from that close. Yes, the NASDAQ has rebounded
from it's low in May, but not back up to its March 20
So, while folks like you and I are correct to silence
the naysayers, we may as well get our facts right
when we do it.
For one who previously argued the merits of
long-term investing (in the short run, the market is a
voting machine, in the long run, a weighing machine),
you seem to be off on a tangent citing short-term
market statistics. Year to date the NASDAQ Composite is
down about 15% and the Dow is down around 10%. Neither
number is one to bring joy but, all things considered,
the two figures are not very far apart. Furthermore,
you have no idea where either figure will land over
the next 12 months.
The market is not a
balance sheet or an income statement. The only points of
measurement are the arbitrary points we pick to suit our own
arguments. But one fact is certain: the long-term trend is
And a closer look at the NASDAQ shows that only a few
of the eight component groups are taking the bulk of
the beating. Telecom, computers and biotech have
fared worst in recent months. Within Telecom and
Computer groups are the Internet issues which have been
slammed. What a shock! Most of the other NASDAQ sectors
have held steady. The Oil & Gas group has been
You have absolutely no basis for asserting that
investors are absorbing painful losses. Meanwhile, NPK has
dropped 25% over the last 12 months, and much of that
loss came in the last week following the admission
that cheaper imports are cutting deeply into NPK's
Keep in mind that many of the internet issues that
have dropped sharply in recent months still trade well
above their year-ago prices. NPK, the "conservative"
stock, trades well below its May 1999 level.
company made a devastating admission in its announcement
that WalMart has deeply reduced its orders.
few posters suggested that the company could find new
outlets for the merchandise which will no longer be sold
at WalMart. Ridiculous! Why would NPK have any more
luck finding new outlets now if it couldn't do so
prior to Walmart's decision?
WalMart is very
tough with the suppliers it chooses to deal with.
WalMart allows its suppliers to make a fair margin, but
it almost always has multiple suppliers to help
ensure competition and favorable pricing.
So many words, so little
said. There was nothing "arbitrary" about the point I
picked from which to measure the relative performances
of the Nasdaq and the Dow - they were measured from
the day that I predicted that both would fall, but
the Nasdaq would fall much farther (March 20). I
agree that it has only been a short period of time, and
I was frankly a little surprised at how quickly and
viciously the Nasdaq corrected. However, from the date of
my prediction, the Dow will not only outperform the
Nasdaq short term, but will also outperform the Dow
longer term (lets say 5 years).
We will see how
things turn out.
Wal-Mart's loss is a big psychological negative.
But how many of you realize just how miserable it is
to do business with this giant.
They pay slowly,
expect ridiculous terms, ask impossible shipping and
warehousing arrangements and in general squeeze at every
Yes, the volume helps. but NPK is not a
company that has such large production runs that big
volumes have a giant impact on gross profits.
surprise investors to learn NPK's profits don't budge at
all, despite WMT's loss.
"Keep in mind that many of the internet issues
that have dropped sharply in recent months still trade
well above their year-ago prices. NPK, the
"conservative" stock, trades well below its May 1999
Don't you mean May 1991?