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Editorials, Monday, 09/11/2000

Generation X: It's time we got real
By Jarred Coopersmith

I just got my house appraised last week. It came in at $150,000. I wish I could say the same of my stock portfolio, but it came in significantly lower.

Stocks can go down?

I'm part of Generation X. You know the one. The news media keep talking about how we've never been in harder times. How we don't understand what a recession is. Does understanding a recession somehow make us want to experience one more? We Generation X'ers are sandwiched between the Boomers and the Millennials.

I admit it. I got caught up in the financial speak of the last couple of years. Where we would all sit around in our offices, stealing glances at the markets, quietly hoping to out do our parents by making millions in the stock market.

My dad told me stocks could go down. How did this happen? How did he know?

The main issue being, this is new to us. Remember the late 70's and early 80's? What do the Boomers remember? Most likely, it was the oil problems, Iran-Iraq, the hostages, disco, Ronald Reagan and that the economy wasn't doing so well. The Millennials weren't even born yet. As a member of Generation X, I remember Star Wars, The Dukes of Hazzard and getting my first computer, an Apple II Plus, with a 5.25" floppy drive and a joystick I could use because I upgraded to 48 kilobytes of memory. I was nine and that was 1982.

Our collective memories start around that time. When computer companies were the craze. All the kids at my computer camp wanted an Amiga or an Atari ST. Those were the "cool" computers. No one wanted an IBM and we laughed at the kid whose parents in 1984 bought him a Macintosh. His parents, we thought, must have really not liked him.

We could be seeing the same thing now with the Internet companies or the stock market itself. Last year we got caught up in JDSU and QCOM, again because they were "cool." We talked about it because there was nothing else to talk about. We tried to convince ourselves that we knew what we were talking about. No one taught us anything else. We didn't know this wasn't normal. So we went with what we knew, or thought we knew.

Wow! Stocks went down.

All these technology stocks make me wonder. Earnings are coming out for the second quarter. For the most part, they can't touch last year at this time. Does my generation really understand that last year was the exception, not the rule? The economy doesn't grow at 5.6% every year.

The technology stocks aren't in a slump. I looked at Cisco Systems. Three years ago, it was effectively at 7; today it's at 61 and change. Hmm, its price to earnings ratio is something around 160. Forty used to be really high!

That's like making more than eight times your money in three years. No wonder my generation wants everything now. What's going to happen next is we'll see some of the smaller dot com companies go away, after they run out of cash. The bigger, stronger companies will survive, but can't continue at 30% growth a year.

My friends will continue investing in places like dogfood.com and swear that it's a good idea, because the words dot and com appear in the company name.

You think I'm kidding.

My advice to my generation. Go talk to your grandparents. They'll tell you an interesting story about how the car was a really wild invention in their day. How there were fortunes being made by all different companies and how anyone, who was anyone, was starting a car company.

But you can't cheat fate.

Every few years or so, a generation gets enamored with a new technology. It explodes on the scene, and may even change the world. Things move faster. People claim the future is in it. You can get things from all over the country by using it. It's quick, it's fast and it's better than it was before. How could we live without it?

I'm talking of course, about the railroad. That was the big thing 100 years ago. Is this new economy vs. old economy starting to make more sense. Maybe this has happened before? Do you see a pattern yet? I think last time it was horses vs. engines.

Generation X was raised on a give it to me now mentality. Is it any wonder why we day trade and job-hop? We buy stocks we don't understand because it's as cool as an Amiga computer.

Well, I couldn't tell you what JDS Uniphase does or how or if it effects my life in any way. I owned some once upon a time. I don't own it anymore.

I own some shares of GE. I know what they do. I own some shares of McDonald's, otherwise known as Chipolte, or Boston Market, or Donatos Pizza. Buy what you can explain. I doubt anyone ever had a problem explaining what a Quarter Pounder with Cheese meal did for him.

We have to get out of this mentality of buying, making nine times your money in a week, and then sell. It can't continue. It won't continue. Ask your friendly neighborhood railroad conductor.

Maybe we should step away from the day trading and focus on the companies that are growing within reason.

I still can't explain what JDS Uniphase does, but I can with McDonald's. It has a curious effect. I don't watch the market everyday. It's kind of the way it used to be, sane and steady.

By the way, my neighbors who live across from me, they have the same house as I do. They just sold theirs for two thousand dollars less. Maybe the next big thing will be day trading houses.

Oh yeah, that kid with the Macintosh. I heard his company went public last year and he made a fortune.

 


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