Clappy-although your post was addressed to John, I thought I'd like to take a shot at it. What would make me turn bullish on tech:
1) Evidence that the indiscriminate granting/repricing of options in these companies has been curtailed. I don't want a piece of a company that will be guaranteed to be reduced constantly and rapidly by gifts/grants to managers and other employees at my expense.
2) Reduction in investment banking activities in stocks purportedly in the manufacturing business (i.e., INTC speculating on MU)
3) General market indicators showing reduction in general bullish euphoria, especially a rise in the Rydex ratio to at least 0.25 and in the 21 dy MA of the equity put/calls to at least 0.6
4) Some evidence that the trade deficit is being addressed and reduced.
5) Slowing commodity inflation (no increase in crude oil futures prices for the near contract over $32 for the next 60 days). Think of commodity prices as a tax. If companies must spend their $$$$ on higher gasoline or electricity costs, they have less available to spend on upgrading their IT.
6) Evidence that the Fed has stopped its "airdrops" (money printing activites), i.e, less than 12 billion/mo added in a given month.
7) Signs that the valuations on selected tech stocks are approaching the level at which money spent on them can be considered investing rather than chasing paper. To wit:
a) P/S no greater than 12 (this is generous)
b) PEG no greater than 3 on groups that presumably are steady growers: photonics, networkers, telco equipment manufacturers(historically also generous, particularly in a rising interest rate/pre-recession environment)
c) PE on cyclical companies, such as Micron and INTC less than 25.
You will note that some of these criteria are company specific, and as a result, I DO invest periodically in tech, even now. But a large scale commitment won't happen untill these are met (i.e., untill I see the whites of Mr. Value's eyes).
Feel free to use these as your own. Good luck.
Adios,
Patron |
