prophet often: Back to Basics.
I agree with you entirely. Those of you who think there is now a fundamental shift away from high-growth tech stocks into "value" stocks, Old Economy stocks, and tech "value" stocks that are values because they have not delivered the goods (UIS, IBM, CPQ) are sadly mistaken. Once the Fed meeting on March 21 and the customary 1/4 point rate hike are out of the way, and investors have ended the knee-jerk donning of sackcloth and ashes that inevitably accompanies these Fed meetings, it'll be back to business as usual. I think Rande Is has the right idea regarding a Summer portfolio but feel his timing is about 4-6 weeks premature. Another outstanding earnings season for tech stocks should give the Nasdaq another push above 5000 between now and May 1. Look for the following:
1. Buy into top-tier stocks that have dropped 25% or more during the past week; you only get these buying opportunities 2 or 3 times a year. In particular, many of the non-PC chip stocks (AMCC, PMCS, RFMD, BRCM) are nice plays in here. So are the fiberoptic stocks (JDSU, SDLI, NEWP, etc.).
2. The biotech high-flyers have all corrected 50% or more and are this year's version of internet stocks circa 1999. The top-tier stocks will bounce back with a vengeance and will attract investor interest once again. They are not stocks I am comfortable holding over an entire year, but are great traders. My picks: HGSI, PDLI, MLNM, ABSC, GLGC, AFFX, CORR, and IVGN. Difficult to know when they will bottom, but rebound will be sharp and swift. Might want to start initiating positions in some of them or accumulate during first "up" day when all of them seem to be rising together.
3. I am less sanguine about internet stocks, with exception of internet backbone plays (RBAK, SCMR, JNPR, etc.). Even the B2B stocks have been battered (ICGE, PPRO, CMGI) and I am not confident that they will bounce back significantly before the summer doldrums. I have avoided this sector this year.
My guess is that buying into these stocks toward the end of Monday will be a winning play. I suspect that techs will regain momentum Tuesday or shortly thereafter. Although the remainder of March will be earnings warning season, there were precious few of these that were of significance last quarter and I do not think this will be much of a factor. I will become more conservative a la Rande Is toward the latter half of April; I will NOT totally abandon great tech stocks, but will become a bit more conscious of valuation and will go 40-60% non-tech from May 1 to Oct. 1.
Just my rambling thoughts. |
