Congrats to shorts over past months but - today something happened which shed light on the irrational exhuberance of the shorting crowd. The Lu bankrupcy rumor. What a big fat lie. Reminds me of the takeover rumors at the top of the tech rally last year. And the predictions that CSCO will fal to single digits. Reminds of of the predictions that QCOM would hit 1000 or Lu 95 or YHOO 500. Just the flip side of it all. Basically what you have now in techs are dream bargain-hunting prices on everything out there. Little micros are selling for below cash in the bank. Giant names are being traded for low PE's of value stocks despite enormous growth potential (at least starting in about 6 months). And the formerly #1 telco in the world LU is being bashed as a bankrupcy candidate. Remember there is only so much water you can squeeze out of a stone. Who knows but it is possible this market is now about 35% oversold even WITH the horrendous warnings and earnings disappointments. Most investors are longterm and on the long side. There is a TREMENDOUS amount of cash on the sidelines and in bonds and fully-valued defensive stocks. But every analyst these opast few days including Barton Biggs the ultra-bear has been saying yes techs stand the best change of gains going forward. Also as money gets cheaper and cheaper, expect more and more acquisitions, consolidation and alliances. Lots and lots of them starting soon. Everything from little 99% down dot-bombs to macro players like WCOM. I'd say LU is a juicy target now. LOR, ELNK, YHOO, COVD, the list goes on and on. The smartest traders got out at the top a year ago. Now we've erased 3 years gains in 4 months. Wouldn't you say the smartest shorts should quit while they're ahead too? I mean permanently? Because if we get a sustained rally and two rate cuts by May 10 the most stubborn shorts will get squeezed to death and lose everything they gained. Just ike I lost all my gains from last year (and more) stubbornly staying long. (jusyt thank God for VZ the one which didn't go down). And if they're so greedy and stubborn they deserve to be. Wish I had been short the last 4 months but now I wouldn't touch any short position with a ten-foot pole. The downside is minimal from here and the (gradual) upside could last for two years just to get back 50% of what's been lost. I predict many techs will double within a year.
Another thing, beating this market down further is really bad for our country, the world, your grandmother living on her IRA, your neighbor losing his job and maybe even your own business, for those who have day jobs. Congrats on your winnings but when LU hits $5.50 on a phony rumor I say that's the sign that the greed on the short-side has gone way too far, is dishonest as hell and those participating are about to get taught a big lesson. LU back up to around $8 after hours by the way. Or so I heard on the radio. Buying LU at $5.50 and holding would probably be about the best trade of the year going forward. Even though it stinks like a dog with fleas right now. A flea bath is imminent. And LU is by no means alone. If you ever short again, just be ready to cover fast. By now you're startign to play with fire. And the hingriest pigs DO get slaughtered. Just look at last year. |
