In spite of assurances from Federal Reserve Chairman Alan Greenspan, the stock market is telling us that the economy is in a recession. The slowdown is most visibly affecting the high tech area. For the past few years it appeared that growth for technology companies would never slow down. Now we are seeing unheard of events such as companies like Dell and Nortel laying off part of their work force. The response by investors has been to punish the share prices of these once darling stocks.
Fear rules the day and any bad news from the technology sector leads to panic selling.
It is at times like this that patient investors are able to get bargains. The response by the government and the Federal Reserve Board is to initiate a tax cut and to rapidly reduce interest rates. These initiatives will eventually correct both economic problems and investors' concerns. Every market downturn has had a scapegoat. This time it is technology but it has been in the past real estate developers, Japan, Mexico, computer selling, energy stocks, etc.