Hi Steve, If I were going to summarize The Money Show in as few words as possible, this would be it:
1) Mr. Greenspan will raise rates 0.50% in the next meeting.
2) Year 2000 will be a trading range period. (sounds good for AIM)
3) Year 2001 will be unloved. (AIM users should watch their Cash "burn rate" very carefully)
4) There was a very thinly disguised bearish undertone to most every speech I heard.
That's about as brief as I can make it. Just for the fun and education of it, I dragged poor LemonHead with me to hear James Stack's presentation just before we sat down for a lunch panel discussion on Technology. Mr. Stack presented a very convincing argument that we're nearing the end of one of the greatest stock bubbles of the last 100 years! He had statistics, charts and certainly conviction of his own to back up his arguments. NASDAQ P/E over 200, Margin debt at several times the normal value and at a screaming all time high, FED money way too easy, US Trade Balance of Payments (imports vs. exports) is awful, etc.
Keith said upon leaving that talk, "It makes me want to call my broker and liquidate EVERYTHING!"
We rounded the corner and went into our luncheon meeting with about 6 heavy hitters in the world of Technology investing. Over cold cut sandwiches, cole slaw, iced tea and sweets for desert we heard one after another of the speakers tell us that we have a minimum of 5 years to over 10 years of continued leadership of the tech stocks - biotech, communications and electronics.
Keith then said, "I think I should call my broker and have him buy it all back!"
Throughout the conference I was amazed by how much better prepared the average AIM user was than the average attendant of this show. I believe I heard that there were 10,000 attending the show, and many were typical Florida retirees. To see these folks pour into the high tech conferences and spend serious time in the exhibition hall studying the latest software and investment vehicles amazed me. Who's buying utility stocks, REITs and Bonds if the Blue Hairs are buying Tech Stocks???
Several speakers (contrary investors or newsletter authors) talked about buying VALUE, OUT of FAVOR, and YIELD. Well, guess what AIMers have been doing that have exposure in those areas? I own a REIT and have been accumulating for a year, just as AIM has suggested. I own long term bond funds and have been accumulating for a year, just as AIM has suggested. In an estate account I'm overseeing, the utility stocks have been crying for more inventory to be purchased, just like AIM has suggested.
So, AIM's been having me lighten up in the high flying P/E stocks in the Tech and Biotech sectors all the while it's been buying up cheap shares of REITs, Utilities, and Long Govt. Bond Funds. AIM's been steadily building up my overall Cash Reserve while the rest of the investment community is going deeper into record territory in Margin Borrowing! (and borrowing in a rising interest rate environment!!!?!!!) Hmmmmmm, Sounds like Mr. Lichello has not only been a good guide for my individual investments, but has been kind enough to help me with my overall asset allocation! Thank you Mr. L.!!
One last impression. I know the Idiot Wave sometimes seems a bit baffling to readers of the newsletter. I know that the vast array of indicators shown and described at the Money Show would also have been overwhelming to many. I hope it doesn't sound like too much self-back-patting, but the Idiot Wave holds up pretty well against all those other indexes, indicators, charts, graphs and other data.
If I were to do anything at all to change my AIM setups at this point, it might be to pad the Buy Resistance a bit. We've worked hard to accumulate Cash in our personal Savings and Loans. We now also have to be good stewards of that cash and only loan the Warehouse dollars when it presents a good argument. Let's not be buying $30 shirts for $29.95. Let's make sure we are buying a 20% minimum discount from previous sells. Let's make sure our Burn Rate isn't too high. Let's make sure we use our cash all the way to whatever the market bottom might be. It may not happen in 2000. It might not happen in 5 years. We don't know any better than the next person. However, our business plan should see us through if we don't stray too far.
It was sobering to hear money managers with literally billions of dollars under their control even hint at market risk. Let's see if we as AIM users can out smart them once again.
I'm slowly working my way through the snail mail pile that accumulated while I was gone. I'm also working my way through the Email as well. I will get it all answered soon. Thanks for everyones' patience.
Best regards, Tom |
