Bernie's made some decent calls of late. This survey (on MSNBC) supports his view that J5P is still substantially complacenct.
msnbc.com
The questions and responses:
Does the stock market's drop concern you?(* 44132 responses)
Yes. I'm worried about my investments. 45%
No. In the long run my investments will pay off. 55%
Have you dumped any of your stocks in the recent downturn?( * 44064 responses)
Yes. 16%
No. 84%
Have you bought any stocks in the recent downturn?( * 43937 responses)
Yes. 36%
No. 64%
Have you made changes to your 401(k) or retirement fund?( * 43521 responses)
Yes. 19%
No. 81%
Economists say much of the U.S. economy is holding up well. Do you agree?( * 43981 responses)
Yes. 60%
No. 40%
Most economists expect the Federal Reserve to cut interest rates next week by ½ point. Should the Fed do more?
( * 43907 responses)
Yes. 63%
No. 37%
Is the media over-dramatizing the recent slide in stock prices?( * 44221 responses)
Yes. 60%
No. 40%
A couple of points. I don't normally think much of these unscientific surveys, due to numerous sources of bias. However, the number of responses was pretty high, and the questions required fairly simple yes-no type responses
which should improve validity. What's striking in particular is that only 16% of respondants said they'd dumped stocks into this downturn, and 38% have bought into it. Finally most want more than 50 bp from BubbleBoy on Green Day. Couple these observations with Shaffer's regarding the absence of a volatility or poot/call spike, and it suggests that the bear has more work to do.
BTW, I know you're short the semis and semi equipment makers. Barron's had a nice interview with a (mostly short-side) hedge fund manager named Neil Drucker. He had a lot to say, but this part should interest you:
interactive.wsj.com
Q: Last spring, too, you predicted that semiconductor stocks might make good shorts six to 12 months out.
A: Scenarios for growth and revenues and earnings were as rosy as possible as evidenced by the then huge valuations. We thought that was extreme. Within three or four months of having spoken with you, we started to see the beginnings of overcapacity creep into some of the memory markets. That's when we started getting short and that's where we've been short for the most part. We have had a disproportionately short exposure in semis over the last six months compared to most other sectors and also compared to our history. Normally we have about one-third of our portfolio in each of the three sectors we follow, and within each of those one-third portions we try to keep a balance of longs and shorts. In the last six months it has not been possible to do that. Most of our semi exposure has been on the short side. Probably 80% of our semiconductor exposure has been short in the last three months, and that continues today. It is very hard for us to get excited about the fundamentals of any of the semiconductor areas.
Q: Any signs that lead you to think the trend will be different six to 12 months from here? That excess capacity will be wrung out?
A: That's the key question. A lot of people have thought that we might be at some kind of extreme sentiment now. You are actually seeing some companies pre-announce or miss their numbers and their stocks don't go down and, in some cases, go up. So maybe they're right. But that's not what we see. What we are looking at now and seeing six months from now is a black hole. The semiconductor space is like the Space Mountain ride where you are on a roller coaster in the dark. People talk about a V-shaped recovery or a U-shaped recovery or an L-shaped recovery. We're still in the very steep first part of the V and we are not even thinking about whether or not it is a V or a U or an L. We're in the dark and we are accelerating down and we don't know where the bottom is. But it doesn't feel like it's anytime soon. That's a very different feeling than we had at the top, when we were expecting the beginnings of the unwinding. One of our investors is a very large distributor of motherboards. He has a good view into overall business trends across a lot of different sectors. We check in with him frequently and he was saying that November was just terrible, business fell off a cliff. December was even worse. January made December look like a picnic and February is worst of all. The last two weeks have been the worst he has ever seen. Not only is business deteriorating, it seems to be deteriorating at an accelerating rate.
Q: Have your business contacts seen these conditions before?
A: No. Uniformly, they say it is the worst environment they've ever experienced. Everybody understands things are deteriorating. All we are looking for is the first hint that maybe the rate of acceleration in the deterioration is slowing. All we need to hear is that things are leveling out, that finally the last two weeks weren't as bad as the previous two. Or maybe order rates or bookings have flattened out, or customers are paying faster than we thought they would. We have the antennae up looking for any sign of potential improvement. Stocks might bounce around and you might get tremendous volatility as people hope for bottoms because valuations look reasonable. But until we hear things have either stabilized or maybe even improved a little bit, it is hard for us to get bullish.
Disclosure: I'm short XILINX.
Have a great weekend!
P.S. One more that looks great right now is MXIM, breaking down out of a huge head and shoulders on the weeklies (I'll probably throw some poot dollars away on it come Monday):
stockcharts.com[l,a]waclyymy[pb50!b200][vc60][iUb14!La12,26,9]
Regards,
Patron |
