FWIW: I don't usually like to post a paid investment adviser's comments because of infringement of a person's means to livelyhood. However, I submit the following in the interest of perhaps supplying a slightly different perspective regarding Big Al and the current market. It says nothing about timing. Only TA can help with that:
December 29, 2000
This is from John Dessauer, Editor of John Dessauer’s Investor’s World, as of Friday, December 29, 2000.
"It is hard to believe. It seems like only yesterday we were bombarded with all sorts of dire warnings about the disasters that were about to strike when the date moved from 1999 to 2000. Y2K fear gripped the nation. My neighbors in Virginia went to their farm because they were afraid what might happen if the lights went out. The Federal Reserve pumped excess liquidity into the banking system just in case there was a major computer disruption. Today we can’t even remember what the minor Y2K disruptions were. All that has been so quickly forgotten. The one legacy of Y2K that we are living with is the bursting of the tech stock bubble. The Federal Reserve dealt us two blows. First by miscalculating how much liquidity would be needed because of Y2K. The excess as we now know pumped up tech stocks to unsustainable levels. Then the Fed used its own mistake as justification for putting on the brakes. Instead of just cooling off the speculation the Fed created a genuine credit crunch. So today as the Year 2000 comes to a close, we are dealing with the aftermath of the tech stock bubble and overblown fears of an economic calamity.
I will say with great conviction that there is not going to be a recession in the United States in the new year. Furthermore, the odds on a meaningful tax cut grow better every day. President Clinton said yesterday that the U.S. Federal Government surplus is bigger than expected. Based on current information, the entire national debt could be paid off in less than ten years. That reminds me of the long months of suffering when the gloomsters were predicting the next depression because the Federal Government couldn’t balance its books. After that and Y2K, I wonder why anyone falls prey to the never- ending stream of popular doomsday scenarios. Why are so many so quick to sell good stocks today? Oh, yes there is some tax balancing going on. That is understandable. But there is also a lot of outright selling going on. That is a mistake. This is a time to be buying stocks not selling. Imagine what the stock market will be like in a few months when interest rates have come down, the credit crunch is over and the Federal Government announces income tax cuts. Stocks in companies with real cash flows and real earnings will do more than recover they will climb to new highs.
I think I have figured out why Scientific Atlanta (NYSE, SFA, $33-1/8) is so low. It is not the company. Wall Street recognizes that Scientific Atlanta is the high-quality company in the cable television business. The trouble is not the industry either. Final demand from consumers for video on demand and broadband services is extremely strong. The problem, as I see it, is the credit crunch. Cable operators have to finance the installation of the new equipment. Naturally they are concerned about costs. Now it is clear that the Fed will be cutting interest rates. In other words it will be cheaper to finance equipment in a few weeks. Why pay now when the price of money will soon be lower? That is why cable operators including the giants like AT&T and Time Warner are pushing deliveries off a few weeks. Wall Street is wrong to project today’s order delays out in the year ahead. What is more likely is that there will be a surge in orders and deliveries right after the Fed get serious and really cuts interest rates. This is an example that shows quite clearly that the Fed made a mistake by saying that rates would come down later. That sent a message to all borrowers: Hold off for a few weeks until the cost of borrowing comes down. The Fed could have avoided this by cutting rates right away" |
