MrB,
The QQQs might appear to be the main beneficiary of some pretty speculative wagers. The underlying numbers that are being currently reported at all levels of the market, as well as the uncertainties regarding future guidance that several CEOs have referenced (see CSCO and INTC, just to mention 2), wouldn't seem to bode well for short term market performance. (By short term, I mean up to 8 quarters.) I think the speculation may be overdone at this point. Any (short term) benefits to be derived from anticipated tax cuts and interest rate cuts are most certainly priced into stocks right now. At this point, I wouldn't be pushing the prices any higher unless I were to see some tangible improvements in pro forma revenues and earnings. Given that 1/8th of the nation's economy is centered in California, and given California's current energy crisis, I'm inclined to be extremely cautious at the moment. Granted, I may be missing a market bottom and some great opportunities, but right now I'd rather err on the side of caution and shield investment capital from the market risks.
Builders should do okay for the foreseeable future. I don't think they'll be a market leader, but I certainly think that for the most part, they are positioned to do well. The fly in the ointment is the California energy crisis. Many folks outside of California are speculating that California may have to impose some sort of new construction moratorium, at least until energy supplies entering California are more stable, and more reasonably priced. Should any moratorium be enacted, builders without any California exposure (or minimal exposure) might be affected as well, because the entire industry sometimes seems to move in lock step. Again, caution is advised. Having a diversified portfolio should afford some protection against a possible retraction in any given sector.
Best wishes...
KJC |
