I agree with you on taking a position in BMCS and not CA but I still think you are premature.
I am going to hold off taking a "buy and hold" position in any high tech company till after the next quarterly earnings. In the meantime, I shall be be doing one or a few day trades (mainly short sales) and be mostly in cash.
I am not going to "fight the Fed". This quarter's earnings did not reflect the complete impact of the higher interest expenses on corporations and the other customers of the hi-tech companies.
Although these higher interest rates are not significantly impacting the profits of Fortune 500 companies, top managers are worried about what higher interest will have upon the businesses and consumers who purchase goods and services from them.
Fortune 500 companies have delayed their hi-tech spending till they have a better forecast on the next 12 - 18 months.
Assuming managers guess their customers are not planning on lowering their buying amounts during 2001, hi-tech shall then exceed their 4th qtr eps objectives because it will also include delayed 3rd qtr spending. The best time to go long will be after the 3rd qtr earnings selloff.
On the other hand, if top management get lower top line forecasts from their sales managers for the 4th qtr and 2001, they just may freeze spending for the balance of 2000 and into 2001.
Right now, it's a pure gamble. Do you know when the stock market was in a similar situation during the last 50 years?
The next quarter will give us a better idea of the revenue trends from the businesses who buy hi-tech stuff.
We may be in the beginning of a "real" bear market. I believe the "business cycle" still exists. Maybe I am too negative, but I remember how low stock prices were and for how long during the 1970's.
I suggest maximizing your financial flexibility by being in a cash position as much as possible. After learning from Tony (Anthony @ Pacific) for over a year, I have become more of a trader than a "buy and hold" investor.
Tony taught me and many others how to do successful long and short term trading and investing, asset management, allocation, positioning and a ton of other stuff.
During that period with Tony, I more than doubled the amount in my brokerage accounts using no more than a third of my capital replicating Tony's trades. I look forward to Tony's return to SI about 3 months from now. His trading strategies work in bull and bear markets. Anyway, I have been too wordy. Best of luck. Rob |
