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Technology Stocks : JDS Uniphase (JDSU)
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To: larry who wrote (19398)3/12/2001 10:13:08 PM
From: t2  Read Replies (2) of 24042
 
larry, It seems picking stocks is not going to work in a downturn. Probably more important to pick sectors in the short term. The lower the PE of the tech sub-group, the better your chances.

For example picking Nokia in the wireless sector over MOT, QCOM, Ericson is not (and has not been) a good short term bet but the good stocks should get the best bounce. Same applies to owning Dell. To me the time horizon is the key factor when picking the sector winners.
It seems the rules that applied when picking stocks within a sector (ie. the winners) on the way up is not the strategy that is going to work in the short term.
At least it has not worked lately.

I think the winners within a sector will do better over time; stocks such as Nokia or Celestica. However, the rules that used to apply in the past when one was loading up on Dell thanks to a Compaq profit warning have not worked in the past 6 to 12 months.

The overownership of techs has been the biggest problem recently and not the fundamentals, IMHO. Over the past 2 years, overweighting of techs had been taking place. There is just no more money to flow into techs unless money market outflows begin from more aggressive rate cuts AND/OR companies start issuing stock buybacks AND/OR the major profit warnings are already out AND/OR other sectors start or continue moving higher.

larry, there is a lot of negativity especially due to the 2000 level being broken. I plan to trade short term into the rate cut.
The short interest is another factor; at much higher levels than in years past in the Nasdaq. 5% to 10% of float being short is common. If the holders decide to stop selling, there can be major bounces due to short covering rallies.

In addition, also sticking with some other underowned sectors to hedge my bets on tech.

BTW--tough game to play in a economic downturn. Learning some new rules that may become useful the next time we get a market bubble....next one should be around the corner.<g>
...biotech? who knows.
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