Gottfried, Thanks for the link. I was wondering though,what basis is there to support his ability to forecast the Nasdaq well going forward? For one to give such a specific guess at where the Nasdaq will be at a specific time seems to me to be information that is very limited in value. Warren Buffet once said that in the stock market it is often very easy to know what will happen, but extremely difficult to know when it will happen. Maybe I just don't understand his methods, but the article gives no clue as to what they are. Let me know if there is more info on this guy to support his prediction abilities.
It seems to me that the more a major stock index goes down, the more likely it will go up, since the overall market tends to go up about 12% per year (data on the S&P going back around 50 years). So, from that viewpoint, it becomes very simple: buy on dips. Of course the Nasdaq got way ahead of itself last year (due in no small part to all those analysts with their conflicts of interest), so the question it seems to me is, at what level does it, and stocks like AMAT, offer good intrinsic value? I have heard so many different opinions on this lately that I am starting to disbelieve just about everything. There was this tech bear guy about a week ago saying the Nasdaq will go to 1000 this year. Another guy was saying the chart of the Nasdaq decline seems to be following the chart of the Nikkei, so forget about the Nasdaq coming back for a long, long time. What is that all about? The chart looks similar? Am I missing something? Using charts in other ways makes sense to me, but I don't see why there should be any correlation between those two. The best argument for it taking a good while for the Nasdaq to come back is based on valuation I think. The huge loss of value in the dot coms will make it harder for it to come back. Stocks like AMAT I think could come back to their high within two years. One way to support that view up is argument I read last March that AMAT was not overpriced then. I posted this about a month or two ago.
Alot of people think that the economy is going to pick up in the second half. If the Fed is aggressive in lowering rates, should this not be the case? We don't have high unemployment or high inflation. I think the Fed should be able to stop this downturn without it going on too long. And if that is true, given that stocks look out about 6 months ahead, might we be seeing the bottom in stocks like AMAT even sooner than a few months from now? On your chart I think only the Oct 98 low corresponded to a period of Fed easing (let me know if I am wrong about this). And at that time the bottom corresponded to the start of easing I think. So, could the fact that the Fed is easing aggressively now make the bottom in AMAT come sooner than your chart suggests? Let me know if this argument makes any sense to you.
I am in the bull camp on the Nasdaq and AMAT, but I must admit that at the moment nothing seems very clear. I guess about the only thing that is clear to me is that I want to own the companies that are going to be enabling the future growth of our civilization. The price those shares should be valued at is for Mr. Market to decide.
Thanks again for those charts.
John |
