Microsoft , Sun Microsystems , Oracle and Intel , once among the nation's most dependable companies, all have warned that profits or sales will miss forecasts. When the Nasdaq peaked, the U.S. economy was growing at a 5.4 percent clip. The Federal Reserve was raising interest rates to keep the economy from overheating. Economists now expect little if any growth for this quarter. And the central bank, led by chairman Alan Greenspan, has already cut rates and is planning more - all in the hopes of avoiding a recession.
Reality hits hard But changes in economic and corporate fundamentals tell just part of the story.
The mania that drove tech stock valuations to levels beyond precedent has something to do with sentiment. Overall, the stock market has had to reel in its optimism in favor of a conservative approach Consider Qualcomm. Co. The boom and bust cycle highlighted several investing basics. Trying to time the trends is a bad idea, say money managers who advise taking a long-term approach to investing. The past 12 months also underscore the value of diversifying among sectors.