Markets don't bottom, individual stocks bottom. A Tradeable Rally is a fallacy, it means that people on margin or indexed funds control a particular set of stocks, to the extent that they and buyers can be lured in, and then short sellers can continuously again and again force a sell off of the rally, the so called selling into strength. When you analyze the standard long term buyer, they do not trade, they invest, and they invest for the long term. The long term investor can only be made to panic and sell if enough stocks, that is "the whole market" as it is loosely defined, is down significantly, or if their own particular stock having been up or stayed even then drops radically back to break even and appears, that is, gives the appearance that it is in free fall, such as occurs after well orchestrated (imho) sequential downgrades by separate analysts, what I call the PENGUIN ANALysts. Otherwise only margined traders can be forced to sell, but they can only be force to sell up to a point, the so called bottoms. Then they are out, and gone. Below that all that remains are the long term buyers, who do not sell, that is support or support levels. Short sellers try to break those support levels with scare tactics. It is easy when the company has no earnings and thus no P/E, or like the dot com dot bombs no real profitable business model or MBA management to start with. Well run Companies with earnings are harder to break down. Occasionally you get poor management, those run by sales forces, or bean counters (financial CFOs that become CEOs) or the engineers/nerds/founders who lack proper corporate management training in dealing with the press and analysts, and make poor forward looking statements that disrespect the company's future prospects. They have not learned to leave expert work to the experts, to the CEOs who have been trained in six sigma type GE Jack Welch MBA rich corporate career tracks with lots of corporate experience under their belts (and resume') Well trained management accentuates the positive, Mother's golden rule: if you don't have something nice to say, do not say anything at all. Instead, poor managers talk improperly and out of the correct time frame. Timing is everything, and poor timing of announcements or execution of the business model, lead inevitably to poor performance on earnings, poorer corporate image, loss of talented workers, and the lack of the ability of the company to provide its goods and services in the future as a stable reliable trading partner in the eyes of its customers and consumers, and thus poorer earnings become a reality even in a good company with good products and business models, due to the wrong thing being said by poor managers. The companies that escape these problems, that have good earnings, good management, and good growing products and services, they bottom quickly and they become immune from sell offs sooner than other companies, they rally and continue to rise. They break out to the upside. They suceed. Markets do not bottom, individual stocks bottom, some stay at the bottom in a trading range, but the good companies break out of the trading range. Now you know why. In an improving economy most companies can break out of the trading range, since earnings improve even with fools running the place. We are living in a world that needs goods and services, we live in a world of shortages. In the Short Term there may be inventory gluts and back orders and delayed purchasing, but long term we live in a hungry world. More so for high technology companies with higher technology and constantly innovating products. Hot products sell fast. What should and will the future look like? That is where the smart money will be. I can tell you, as I have in the past, that the world will not long tolerate the military and political infiltration of communist chinese slave labor at 12 cents per hour and the cheaper slave goods they can deliver whether or not it creates higher earnings in the very very short term. In the long term, slave labor goods are not sustainable. Slaves do not buy products. Slaves do not trade. Slaves do not invent, although they may dream. There is no added value with slavery. Free men and women earning decent wages and salaries are more productive and can trade among themselves more freely, more often, creating more wealth. That is why all these companies that traded with the enemy, Communist China, such as QCOM and FDX and the like, are in for a big surprise. Absent an international minimum wage, totally free trade with communist slave labor and other like countries is a poor business model or investment model and is doomed to failure. Remember the investment changes in Apartheid nations, it failed too. Cuba's economy is in shambles also, sugar at Russian prices is not attractive, and Cuba will either move away from Communism or pay the price for slavery, with continued embargoes, whether politically mandated or ultimately imposed by the free markets they covet and despise at the same time. A Free Market requires Free People. The taking of the US EP3 electronic surveillance plane this weekend is just the beginning of the long overdue chinese cold war. Trading with Japan, and Europe on the other hand or India, is where the technology, talent, and truly value added free trade is and will be. That is where the smart money will be also. That is why companies like PALM and NTAP that I currently own and even the down beaten: CSCO, COMS, AMD. INTC, SUNW, NT, DELL, IBM, ORCL etc that I used to own will also do well. They trade where the money is, and the money is where democracy and decentralization thrives. The US Economy will recover, is in recovery and will thrive without centralized control of monetary policy, as democratic and decentralized fiscal and market control forces take its place. Moscow Center failed, and so will Peking (Beijing) Centre fail.
Money goes where it is well treated and well respected. Alan Greenspan and the Asian Corrupt Bankers have disrespected the US Dollar for well over 18 months now. The Chinese Communist Cold War will straighten things out as I predicted over 18 months ago.
I am,
Truly your$,
-Crystal Ball |
