Maverick, you always misinterpret me for some reason.
Let me reiterate:
- The Fed is most concerned with consumer confidence now.
They cannot allow more of a slowdown in this economy. CSCO's numbers are only relevant because investors read into them a possible continued hard landing slowdown. I'm sure the Fed is already aware of that, but the market's reaction to this must concern them. They know the turnaround can be best accomplished by increasing the cheap money supply and giving debtors a break. They are also concerned about housing, retail,etc. But America's foremost industry now is technology and yes the internet. Therefore continued cutting is not only warranted but necessary in order to stop irrational tech stock selling like we saw on January 3rd.
- As for calling bottoms, it's hardly a perfect science.
We all just guess. But look at all the profit warnings lately. Every time a tech stock has been attacked on bad news it has quickly rallied back. Has something changed this week? Not really. We could be at the bottom now or not. But my predictions are no more or less accurate than anyone else's in the long run, including shorts who insist we're testing January lows again soon. I disagree with that so I invest accordingly. I also know perceptions change overnight and there is no such thing as "dead money" in today's market. A week ago SUNW at $26 would have been considered a steal. And maybe it still is. depends on a lot of factors we just can't be sure of right now. And again perceptions will change.
- On my bullishness. I am not overly bullish. CSCO at 80 PE was the highest PE I have ever bought. And I was only tempted to buy it after it dropped from 67 to 34. It was a mistake as it turned out, as I could have gotten it 10% cheaper. But in the longer term maybe it's still a good buy.
I always look for value. Which is of course in the eye of the beholder. Is CSCO value at $30? Again, in the eye of the beholder both yes and no.
I also believe even the most maligned stocks can and will rally from any oversold condition. Just as they will drop from any overbought condition. And I don't like following the herd even though sometimes that costs me. Again it's just a matter of picking the bottom, but whenever you see a stock taken down "too fast and too much" chances are you will see at least a "dead cat" bounce, though that's often a misnomer. ADBE for instance I bought at $42. Could have sold yesterday for $45 but didn't. Now it's at 40. Was mine a bad buy? No, only if I didn't catch the short term top. But is it a bad investment? Not unless I have to sell for a loss. CSCO, SUNW, ADBE etc were hit hard today. But MSFT, IBM, CIEN and INTC weren't. In fact MSFT and IBM went up. Are they really better buys that CSCO at 30? Today the perception was yes. Tomorrow the perception could be no. It's all just a numbers game and no one holds a monopoly on being right, not even the sharpest guru or brokerage CEO in the world. Not even Greenspan. Who should have started cutting a lot earlier and now must make up for lost time by redoubling his eforts. Or else this could indeed be a hard landing which shorts are betting on. My bet is on something a little softer which doesn't exactly make me a bull but makes me want to buy when the selling gets climactic. And yes today's selling of CSCO did get panicky for awhile there. Shorts screaming it's going down to 20 and some starting to believe them. Do dump, dump, dump. Well it finished at $31 and change and a 15% hair-cut. I'm down 10% and I'm not happy but tomorrow is always another day. Sorry to be long-winded and post so much but it's hard to ignore you and Softie when you want to "fight".
I think we all agree on one thing. If we knew for sure it was the bottom we would all be bullish. But how many of were smart enough to be bearish and short the techs back in March? Is this the opposite of last march? Are we at or nea the tech bottom so that within a year we double our money? if so then against all prevailing wisdom we should be loading up and holding long through whatever the volatility. What am I doing? Holding 50% in VZ and using the rest to try and catch short-term bottoms and scalp 20% profits. That's all. I am not perfect but I did succeed about ten times in a row since December until this past week. My only mistakes were not taking profits fast enough in some cases. Even CSCO, ADBE and SUNW I had smal profits on yesterday. So I'm not as wrong-headed as you might believe. But I'm not as quick as I need to be either. The hindsight is always 20-20 so don't blame yourself. You play you pay. No risk no reward. |
