The last paragraph of this article talks about SFA and makes sense. If you have a longer term outlook, then SFA is a good buy here using this logic.
Message 15111242
To: Drbob512 who started this subject
From: kleht Tuesday, Jan 2, 2001 7:03 PM ET
Reply # of 19183
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" |
