Commentary:
Haste Makes Waste
It's been a wild couple of days.
Yesterday Chairman Bernanke said the Fed
would not rush into its next rate increase. Instead
it would wait to see how events developed. The
market loved it. The NASDAQ added 47 points in
two hours, though it gave some of it back later.
Then last night Microsoft issued disappointing
quarterly earnings and guidance. The market's
punishment today amounted to an 11.4% drop in
MSFT's price, a loss of more than $32 billion in
market value. Unfortunately, the rest of us took
a beating too. No wonder the words Microsoft
and crash are so inextricably linked.
What happened at Microsoft may or may not
be significant for the long term. It's not easy
for a company that large to continue to grow,
and they face serious competition from Google.
But Bernanke's flexibility does seem significant.
I'll never forgive Greenspan for his haste in
raising rates in 2000. If he'd waited, he'd have
discovered that the threat was not an overheated
economy but a slowdown. All he had to do was
give events a little more time. He would have
discovered the right thing to do.
Instead he precipitously raised the cost of
money. In the process he put a nail in the
coffin of the vulnerable new economy.
As I observed at the time, Greenspan was in such
a hurry you'd have thought he was a teenager in
the back seat with a girl for the first time.
We need a Fed Chairman who can keep his pants
on. That seems to be Bernanke.
The Week Day by Day:
A bad week for the NASDAQ, thanks to MSFT.
The Week's Top Gainers and Losers
| Gainers | Losers | ||
| ZRAN | + 25.0% | PWER | - 11.4% |
| EQIX | + 14.6% | BRCM | - 5.8% |
| INTC | + 4.8% | LNOP | - 5.7% |
| SYNA | + 4.5% | CPHD | - 5.4% |
| BWNG | + 4.4% | NETL | - 5.4% |
A tolerable week for
the GTI, thanks to
ZRAN and EQIX.
Returns for the Week:
Gilder Technology Index (GTI): -
0.0%
Nasdaq Composite
Index (NSD): - 0.9%
S&P 500 Index (S&P): - 0.1%
Historical Returns:
| Period | GTI | NSD | S&P |
| 1997 (est'd) | 21% | 22% | 31% |
| 1998 (est'd) | 48% | 40% | 27% |
| 1999 | 284% | 86% | 20% |
| 2000 | - 44% | - 39% | - 10% |
| 2001 | - 43% | - 21% | - 13% |
| 2002 | - 56% | - 32% | - 23% |
| 2003 | 130% | 50% | 26% |
| 2004 | 3% | 9% | 9% |
| 2005 | 5% | 1% | 3% |
| 2006 to date | 26.6% | 5.3% | 5.0% |
| Avg for 9+ yrs | 12.5% | 6.5% | 6.3% |
| Last 52 wks | 60% | 21% | 13% |
|
Since the
high of 3/06/00 |
- 72% | - 54% | - 14% |
|
Since the low of 10/09/02 |
371% | 108% | 69% |
Comparison of Returns
for GTI Stocks
By Whether or Not They Pay Dividends:
| Year | Do Pay Dividends |
Do Not
Pay Dividends |
| 2004 | 11.6% | - 3.3% |
| 2005 | 11.1% | 4.2% |
| 2006 to date | 6.5% | 35.4% |
| Avg for 2+ yrs | 12.7% | 14.3% |
Room to Grow:
| GTI | NSD | S&P | |
|
Loss from the high to the low |
94% | 78% | 49% |
|
% of the loss recovered |
23% | 31% | 71% |
|
Return needed for a new high |
257% | 117% | 17% |
Graph of the
GTI's long recovery attempt.
Individual Year-to-Date Returns:
|
ADI |
6% |
GLW |
41% |
QCOM |
19% |
||
|
ALTR |
18% |
IKAN |
26% |
S |
6% |
||
|
AMD |
6% |
INTC |
- 20% |
SIGM |
- 10% |
||
|
BRCM |
31% |
KEYW |
25% |
SMI |
12% |
||
|
BWNG |
130% |
LNOP |
80% |
SYNA |
6% |
||
|
CPHD |
4% |
MVIS |
1% |
TSM |
6% |
||
|
ENER * |
9% |
NETL |
48% |
TXN |
8% |
||
|
EQIX |
62% |
NSM |
16% |
XLNX |
10% |
||
|
FLEX |
9% |
PCMS * |
- 6% |
ZRAN |
69% |
||
|
FNSR |
126% |
PWER |
17% |
(*)
Joined list this year (ENER
2/10, PCMS 4/7).
Return is for period in GTI only.
From the GTI's Origin (1/1/99) to Now:
Weekly Change in the GTI, Last 52 Weeks:
Trailing 3-Month Returns, Last 52 Weeks:
The GTI companies are those "Telecosm
Technologies" in the Gilder Technology
Report whose stock is readily available to
investors. If a company is not traded on the
NYSE, AMEX, or NASDAQ National Market,
it is not in the GTI.
There are now 29 companies in the GTI.
They are listed, with year-to-date returns,
at the bottom of the left hand column.
Advances vs. Declines:
Among the GTI stocks this week, there were
8 up, 21 down, 0 unchanged.
Volatility, Trend, Recovery:
As an indication of volatility, this table shows average weekly change in the GTI
each year:
| Year | Ave Wkly Change |
| 1999 | 4.2% |
| 2000 | 7.7% |
| 2001 | 8.5% |
| 2002 | 6.8% |
| 2003 | 4.3% |
| 2004 | 3.4% |
| 2005 | 2.1% |
| 2006 to date | 2.7% |
As an
indication of trend, this table shows
number of up weeks for the GTI each year:
|
Year |
Number of Up Weeks |
As a % |
| 1999 | 39 of 52 | 75% |
| 2000 | 24 of 52 | 46% |
| 2001 | 22 of 52 | 42% |
| 2002 | 19 of 52 | 37% |
| 2003 | 31 of 53 | 58% |
| 2004 | 28 of 52 | 54% |
| 2005 | 26 of 52 | 50% |
| 2006 to date | 10 of 17 | 59% |