I'd like to add to that post.
I think the market is telling people that most of the people that rushed in to make a fortune on Internet are not doing as well as we thought they would. Online retailing is going to be looked at as joke in a few years. The people that will make money selling stuff on the net are the same people that make money selling stuff off the net. The net will just help them save money in the process. Most dot com business are doomed for failure and the hole internet sector will suffer from the backlash. As companies like ETYS, AMZN, PCLN, and EBAY struggle to stay a float the majority of the rest will be dead in the water.
CSCO and other high P/E stocks will disappoint you can bet on it. Before the pull back started the longs of this board said that CSCO would grow at 50% year over year for the next 5 years. Now it seems the tone has been changed to a 30-50% growth rate for the next 5 years. I think the revenue will come the earnings will suffer. I don't think that 30% year over year will be achievable for the next 5 years. I don't think that the infrastructure build out requirements can be met. I have now doubt that earnings will suffer as CSCO trys to maintain growth rate. CSCO is a terrible long term investment at this level and I think that anyone that takes the time to think about it and do the math knows this. I can't believe that informed investors think that CSCO is a good long long term investment at this level. I don't really care what any of the old bulls on this board say.
I also think that we are going to be facing a real problem of the reverse wealth effect of a market downtrend. Just as people spent on credit and bought on margin we all will now suffer as they change there spending habits. When this economy really begins to slow, LOOK OUT!!!! Cosco, Radio Shack, Circuit City, Home Depot, just for starters...
Old economy stocks will have earnings short falls and change their spending habits like the consumer does. PC's, Semi's, Cell phones, TV, Stereos and the like will suffer in sales growth. Tech stocks will disappoint and disappoint big time. It may take months to really start to be seen but it will feed on itself. As the market pulls down the economy will slow and the cycle will continue to spin down.
I think that so many people are piled up to their eyeballs in this fund and that fund. There are sooooo many frigging funds out there. I think that most would argue that everyone is in for the longterm that they would never think of getting out of those funds. We don't need to worry what happens if the public sells out of some of thier funds.
Brokers are telling people to go to 90% equities and 10% cash. I think this is nuts!!!! Whats next 130% equities, credit card dept and a car loan?
The time will come when people look at their mutual fund statements and freak! When they look at the performance of their growth funds and see they didn't grow! When they start to consider getting out of some of these funds, out of some of these sectors. I don't see this bubble ending with a soft landing. I see a market doomed for a big fall.
A big part of the good times we have been having has come from the incredible performance of the stock market. When the market starts to disappoint things will get real ugly. The sooner we take are medicine the better off we will be.
Bambs
P.S. For those that asked I'm not short and holding yet. I'm in cash and just going with news plays intra day right now. I'm waiting for a major disappointment in a big cap stock to start the fall. Could be INTC, could be CSCO, could even be a GE...maybe even some economic releases....I will wait for the volume, conviction and fear to come back into the market before I set up any longterm position. |
