Published April 2001

Investors, it’s time
to refocus on long term

Watching plummeting stock prices and market indexes this year, particularly in March, has been a traumatic experience. Reassuring investors is an uphill task.

U.S. Bancorp Piper Jaffray's daylong session at the Sheraton Hotel in Seattle last month tried to ease the pain. But right afterward came one of the worst weeks for investors in recent stock market history, proving once again the pitfalls inherent in investment forecasting.

Still, for those who take the long view, the day's market analysis offered some bright spots, focusing on the true strengths of many of the market's best corporate investments.

Microsoft officials led off with their premise that the Internet is maturing into a new phase during which the world's companies increasingly will move their technology and business processes to the World Wide Web, marking the start of a long-range transformation of the way business is conducted.

Chief Financial Officer John Conners said Microsoft will be a significant player in helping companies share information and transact business in the new digital, wireless world.

The company has expanded, not contracted, its employment in recent months, reaching 42,000 at the end of February. Two million people in the world are working on new Microsoft technology and applications, positioning the company as a powerful force in 21st-century technology development and applications, Conners said.

Then, Piper Jaffray and US Bancorp spent the day telling investors that much of the flux of the market is because there are more than 4,300 equity funds, 2,200 bond funds and hundreds of money-market funds looking for short-term growth, while individual investors often are more focused on long-term retirement needs.

The result is that solid long-term growth is being interrupted, diverted and diluted by the overpowering attention to short-term profits by institutions representing huge blocks of stock ownership.

Still, the conference hosts predicted a modest rebound in the latter half of this year, estimating S&P 500 earnings would recover to 10.9 percent annually by 2002.

Growth will continue to come from stocks in the health-care field, the Internet, technological developments and expanding blue-chip companies engaged in such pursuits as world commerce, energy resources, biotechnology, wireless products and telecommunications.

The bursting of the technology-Internet investment bubble has brought investors back to the basics necessary for solid stock market and economic growth, including profitability, solid management teams, quality products and services, and attention to consumer satisfaction.

Let's hope those who know better — including institutions and private investors — will take a more mature view of the stock market and make investment choices that will reap benefits for both short- and long-term investors.

The volatile stock market will only mature when its investors mature.

Back to the top/April 2001 Main Menu