Skipper Sees Another Year of 'Tough Sledding' for Big Tech

We don't have a crystal ball here, and survival as a tech investor is as much as anything a function of knowing when you're in one of those periods where what you know isn't worth much, and what you don't know is really important.

For sure, we are in one of those. So our investment time horizon is uncharacteristically short; we normally think in multiyear blocks.

7. Any stocks you feel comfortable with for the long haul?

We have a few things that look good for the long term -- things like Overture Services(OVER Quote), which we've owned for several years. We've cut way back on Take-Two(TTWO Quote), but we've owned that for years. We have owned Symantec(SYMC Quote) for a couple years, and we own a ton of Verisign(VRSN Quote). At the price that thing was at in October, it was like we would own it for years. Now, I don't know how long we'll own it, but you know what I mean.

A lot of these investments get down to P/Es of 4 or 5 and you say, "That can't be right." Either the E is wrong, or the stock's cheap.

You have to face up to what a friend of mine says: There are no cheap stocks, only wrong estimates. The reality is, we have just come off a prodigious bear market and there were some incredibly cheap stocks. And it's not obvious to me that the ones you want to own for the next five years will get back to the lows of September. And that's a really important point.

If you're only willing to buy stocks at September valuations, you probably shouldn't be looking at tech. Because the things you're likely to buy, you probably don't want to own.

This is the point in the cycle where P/E has less meaning than normal. The reason is because the Wall Street estimates are all done on spreadsheets and are all normalized, and it's really hard to forecast the impact of fundamental cost reductions. You have two levels of problem: First, you can't forecast the impact of incremental revenue. Second, you have no idea whether there's incremental revenue or not. You have two ways of being wrong.

The spreadsheet tends to cause you to hedge your bets both ways. So when people have upside surprises, they tend to have huge upside surprises.