Well, I think any statement about stock prices is always suspect unless it's made by Warren Buffett.Notably, Gates didn't specifically mention Microsoft and, typically, was more open to interpretation than Ballmer. Still, it seemed clear to me that he believes tech stocks, in general, remain overvalued. Perhaps more interesting than Gates' comments -- made after the close Monday -- was the seeming absence of market reaction to, or media chatter about, them. Clearly, we're not in Kansas, circa 1999, anymore. The relative and absolute lack of reaction to Gates' view on tech stocks says something about the sector's fall from grace, if not our collective consciousness. Imagine the reaction if Gates had said residential real estate is overvalued. The lack of response to Gates' comments and the sense tech stocks are no longer an acceptable topic of conversation in polite society might prompt a contrarian to say it's a bullish sign that people don't care about tech or have given up on the sector. Clearly, there is a lot of skepticism about technology stocks, as evidenced by the steady rise of short interest in over-the-counter stocks this year and the uneven trend of inflows into growth mutual funds. That's understandable given the sector's recent performance. Despite rallying the past four sessions, including Wednesday's 1.5% advance, the Nasdaq Composite remains down 9.8% year to date and is the worst-performing of the major averages.
ButI would say that there is as much overvaluation today as there is undervaluation. People still love technology companies. People still have the dream, and there are big multiples. We're nowhere near where we were in 1999, but in no way has there been a swing in the other direction, to a measurable degree.