The timing of the peaks and troughs of the cycles is controlled entirely by the fundamentals (this may not be obvious until months after the turn). But the amplitude of the waves is a function of momentum investors piling in and out. Totally emotional. So, I follow the semi industry (margins, inventories, etc.), to try and time the peaks and troughs. But, I look to market sentiment to try and guess how wild the euphoria will get, and how deep the despair. My track record is, I've done a pretty good job at guessing the bottoms, and a pretty bad job of guessing the tops.
No, I haven't read the Dent book. The baby boom demographics are strictly a U.S. event, not global. And the Global Village is a reality, with frictionless movements of capital, information, labor, and goods. AMAT is an excellent example of this. The majority of sales (and therefore profits) are foreign sales. And those semi-equip sales are dependant on chip sales, with all the big semi companies manufacturing and selling globally. The stock market shows the same globalization. We are rapidly moving to a single global stock market, with exchanges in the U.S., Europe, and Asia all listing all the big companies, and 24 hour trading. U.S. demographics don't matter. |
