Joseph, This is certainly new territory for all of us. I am doing the same thing, trying to figure it out. There are reasonable arguments that one should get out even now, however the contrarians would say that thoughts like this mean we are very close to a bottom. Certainly people will be more afraid of tech, but tech is really the future of America. I really don't know the answer. Maybe folks who were light on tech will provide the funds to help make techs move up from the bottom. It is true that there is a lot of cash on the sidelines. I am really quite confused at this point. Information overload. I think a big part of what is going on is this inventory problem, one aspect of which is the countless dotcoms going out of business (which is likely to continue for a good while) and selling their equipment on the cheap. Eventually this effect has to go away. I hope they stay in business long enough so that Moores Law starts to affect the value of their equipment, but that is wishful thinking. Maybe the key is to avoid tech sectors that are affected much by this inventory problem. If that logic is correct it would mean stay out of Cisco, EMC, NT, LU, JDSU, GLW (less affected?), the various communication chip makers, JNPR (guessing), and etc. The safer areas would be chip equipment, PC related, wireless, and other consumer tech gear. I am thinking the used PC's will not be worth so much in total dollar value, and therefore not hurt the PC companies as much.
If techs get low enough, there should be someone who buys, especially if the real PEG and P/S ratios indicate they are cheap relative to non-techs, which I think can be argued in many cases here. One major bear, Fred Hickey, argued the Naz may go to 1000 and the Dow to 5000. Last time I checked the Naz was closer to that mark than the Dow. All this is very hard to figure. If anyone knows what to do, please let me know.
John |
