Vol. 12, No. 3,009 - The American Reporter - October 19, 2006

Market Mover

by Mark Scheinbaum
American Reporter Correspondent
Boca Raton, Fla.

Printable version of this story

BOCA RATON. Fla. -- Since I predicted that Michael Dell must know something great about his company that we don't, his stock's value has fallen another 10 percent and forecasts for the rest of 2006 are miserable. The only bright spot is for sparkling new products late in 2007 - maybe.

So, like the rest of the people who dollar-cost average, double down, and refuse to believe that Dell, Ford, IBM, GM, Intel or Microsoft are going out of business anytime soon, I bite my lip and continue to suffer.

Yet there seem to be things about the computer business that exist in my family, circle of friends, and business environment, which I don't hear mentioned in the business press.

One analyst said on tv, "Everyone has the computer they need for games, or DVD's and so forth and no one is rushing to buy a new computer, so the computer companies don't need to buy more chips and the whole industry is in the doldrums."

This interview came a day after I had purchased a new Dell over the phone from an operator in Austin (not Bangladesh), and received a free 17-inch plasma monitor which last year would have cost me as much or more than the computer.

To be sure, my kids sometime in 2003 or 2004 ditched their old laptops for the latest Sony Vaio or the IBM (paid for by management), opting for a zillion multimedia possibilities.

But the rest of us upgraded our old 1994 or 1996 versions with a "new" computer sometime in 1999 because, first, we needed new bells and whistles and, secondly, we wanted to avoid any Millennium worms or viruses.

My Dell, which our resident techie declared officially "fried," is now almost seven years old. "I could fix this all day long, but for the cost of repairs you could buy a fine new Dell two or three times in the next seven or eight years," he told me, adjusting a few pens in his plastic pocket protector.

Destroying our computers is not always some secret attacker's fault. Over the course of six or seven years, many of us have overtaxed and overloaded "media" files and have duplicate, triplicate or more programs doing the same functions.

When I drop in the CD from Walgreen's with the digital photos of cousin Bernie's wedding, I automatically upload the latest Walgreen's Kodak or Fuji photo program. A few weeks later, Wal-Mart or CVS will have created two new "easy, fun, and family-sharing ways to enjoy your photos."

Google's great "Picasa" program grabs all images in a user-friendly album. The problem is it also grabbed the email I thought I had deleted from my weird college buddy of naked 400-pound women playing a beach volleyball game in a phony Volkswagen commercial taped in Latvian with Portuguese subtitles.

Back from a civic-club convention (my officemates dubbed us the "Raccoons"), I was handed the free, official photo CD as a gift. To find the 15 shots I really wanted I had to spend two days manually deleting 1,500 convention photos, all of which were stored automatically in Picasa files.

The bottom line is that those of us with a five- or 10-year investment horizon are unlikely to get burned by buying more and more and more of the securities of great companies at discount prices. The greed involved might actually be more conservative than day trading or wheeling 'n dealing with lesser companies.

Yet, what I would ask a client 10 years ago: "Do you really think you will be upset a decade from now, loading up on Microsoft (or GM or Intel?) today?", no longer works.

The fact is that the stock of some giants of Wall Street such as Intel, Microsoft, and GM have been dead in the water for much of the last decade. Others, such as Ford and many airlines, have been crushed.

As I purchased more shares of Dell this week for $19 and change, I thought of the people who grew up in the Great Depression and lived through 1929. Legendary investors such as Bernard Baruch and firms such as Salomon Brothers were able to purchase AT&T or General Electric at ten cents on the dollar by 1932, and hung on until World War II.

That's a long, long time to be patient, but if Michael Dell is more correct than he is wrong, the long-term results of loading up on Dell at $19 instead of $39 per share could be gigantic.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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