Just a thought on the NASDAQ
It seems as if everyone has an opinion on: (1) how low the NASDAQ will go; (2) when it will hit its low; (3) how long it will take the NASDAQ to recover and begin appreciating again.
I do not see a Japan-like collapse of the US economy as some do and my guess (and that is all it is) is that the NASDAQ will bottom sometime within the next 4-5 weeks, between now and tax-time (April 15th). The next warnings season, poor earnings reports, and endless analysts downgrades should result in as much "capitulation" as we are likely to see. I would not be surprised to see NASDAQ hit 1800 but feel that if NASDAQ approaches 1600, buyers will come rushing in.
The reason I mention this is that this is a good time to begin thinking strategies for buying back into the NASDAQ (unless you see the NASDAQ going below 1600). One idea that has caught my attention is buying shares of the ProFunds Ultra OTC (UOPIX) mutual fund. It is a fund which uses leverage and options to double the movement of the NASDAQ 100 QQQ's Index. Unlike options, there is no time decay or guessing on the time-frame on a month-to-month basis. It also avoids the guesswork of selecting individual technology stocks. Because the time frame in which tech products become obsolescent has shortened dramatically, I think it is becoming prohibitively risky to buy individual tech stocks.
This is a very risky and highly speculative fund, however. It was up 185% in 198, up 233% in 1999, down 74% in 2000, and is down 45% year-to-date in 2001. The main risk I see is getting into this fund too early; the downside is devastating if you buy UOPIX shares and NASDAQ continues to fall, especially if you get fooled by a bear market rally.
Does anyone on the thread have thoughts, either positive or negative, regarding this strategy? What indicators would you use to signal when to begin buying tech stocks again? |
