rossmrm,
First a disclaimer: you must recall that (while I was long from a split-adjusted $7 (CDN) until the middle of January when I sold all), I had recommended that 'newcomers' avoid buying what I saw as an 'over-priced' stock when JDS went above a p/e of 50. 'Don't chase a roaring stock upward,' is part of my investing style. In a sense, I was very wrong for over a year since the p/e continued to expand until February of 2000. The trick, of course, will have been/would be for anyone who chased JDS upward to get out before the price goes below their gain. Or, hold on through a return to much lower valuations.
To return to JDSU and the market in general I will want to see:
1. Inflation--Signs that growth is likely to slow below an inflationary rate. Since FIBER is one of Greenspan?s key indicators, it is mine too. dismal.com
2. Valuation?a severe haircut on valuations across the board. Valuation on the broad market (S&P500) is still above the previous record at 30.15 today. If we were to simply return to the previous historical average, that would be halved! If we go below that, which we are likely to experience in the irrationality of a bear market trough, we could easily (from an historical perspective) go to 10, 9, or 8.
3. Capitulation?bear market bottoms are characterised by wide-spread abject dysphoria about the future of stocks as investments.
As I have written, I believe we are very far from these conditions.
Ciao,
David Todtman |
