Victor,
There is almost nothing I wouldn't buy right now, if I had the money. This idea that many have that we are supposed to buy when things are steam rolling ahead has always been repugnant to me. I know there is no discussing it with almost everyone here at si; si is a haven for folks who worry about the next 3 minutes. But it is drilled into my genetic structure to be going nuts at a time like this, taking everyone's stock and hanging on for better days or dare I say, "years."
However, I have blown this opportunity by deciding early in the year that I had enough money, and would just hold on through a slide that I fully anticipated. So I am pretty stuck. And I am stuck because this has gotten much worse than I anticipated.
I see things in this market that I have never seen before, with regard to valuation differences, and this has been my life for 13 years full time(try 100 hours a week of thinking time anyway). Let's take AMCC. Amcc is selling at about 170 times next years earnings, IF growth in the next year is 100%! Now, amcc and jdsu are in very, very similar situations in their businesses, and have similar growth rates. You may want to pick on JDSU but pin this on your wall: JDSU will earn about 1.20 next year if the sdli purchase goes through, so WHY IS IT SELLING AT 70 TIMES next years earnings when AMCC is at 170x?? There is NO reason. I see a minimum of 100 examples of this. BVSN and VIGN are getting killed but sebl holds up. SEBL is great but come on. SUNW is at almost 100 times earnings still. Is it working to buy the cheaper stuff that has a great business? NO! It isn't. Take SAWS or ADI or CNXT or TXN(please). These things have been getting killed for 6 months on rumors of a slowdown that STILL HAS NOT MANIFESTED. The pe compression has been awesome, but the forward peg compression has been unreal.
It needed to happen Victor, but it is overdone now. It really is time to buy, but let me add for RR's sake that this is if you have a 3-5 year time horizon. If you do, it will be tough to go wrong. |
