04/28/2006

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.

 

 

The Year to Date:




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:


 
Makeup of the GTI:

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 a
verage 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%