from dingdingding.comLatest Market Commentary:
August 9: Today's Riddle. What can you buy today for $107 that may be worth about $75 tomorrow? And part II of the riddle: Which well known expert just recommended it in the latest issue of Forbes?
Answer: Eli Lilly (ELI). And Laszlo Birinyi Jr.
This is the same famous, or infamous, Laszlo Birinyi Jr. who said the Nasdaq would crash on the very day it bottomed a few weeks ago and jumped 500 points. Bertha said just the opposite.
Now, in Forbes, he said that "the winning is very concentrated in the health care sector. ... Eli Lilly, $40 billion. This is a sector in which to put money for the second half of 2000. Today the real strength in this sector has shifted to ...Eli Lilly (95, LLY), and Glaxo Wellcome."
If you are wondering why "smart" guys like Birinyi get caught on the wrong side about as often as anyone (even though they still make 7 figures no matter how bad their advice), it is because they are, quite simply, greedy: "my philosophy is to buy strength, not bargains." Warren Buffet and Ben Graham disagree. That philosophy will prove to be a fool's paradise by 2001 as it already has in 2000. In a bear market there is no "strength," only suckers rallies.
Our philosophy is to short into "strength" and buy bargains that have bottomed (hopefully) and are turning higher. Or to buy nothing at all in times like these. Cash and gold will prove to be better investments than most over the next 2 years.
August 7: Will it ever end? Just when some sensibility was returning to the Nasdaq, brought about by lower prices and lower earnings forecasts, the bubblevision cheer leaders shouted: "Give us an R. Give us an A. Give us an L. Give us another L."
Y? 'Cause that spells "RALLY!!!" Huh? How can the market rally on lower earnings and missed bottom line numbers - especially when we all know that "earnings matter" again? Not any more. Now its "top line growth" again. And no more interest rate hikes, of course. In a desperate attempt to stoke the fires one more time, the chant is for higher top line growth - much easier than profits. Didn't we just do that a few months ago and realize the folly then? Guess not. Anything counts again: a merger, gaining market share at the expense of margins and profits, bloated numbers. Even "eyeballs" are enough to take the Nifty Ninety higher one more time. And as we have unequivocally stated over the last few weeks, insiders are licking their chops as they line up to sell billions of worth-less shares to the unsuspecting public during this final rally before another leg down. If you own tech mutual funds, be sure your exposure to the top 100 momentum stocks is limited toward the end of the year as the rally fades into history.
Ask yourself this question: Is it a conflict of interest for the large brokerage firms (who will unleash a record 40 new IPOs this week) to comment on the health of the market and individual stocks? Who butters their bread? They stand to make or lose tens of billions depending on how well the public receives their offering. And they are doing everything they can do ensure that the "gods" are not angry. Be careful out there. This is no time to play with your retirement savings or the grocery money. |
