Quit reading The Prudent Bear during a rally period. Maybe that's your problem. When you read only bad news you might get the impression that's all there is and miss the best opportunities.
Guess what? We all know about the bad news. It's all we've been hearing for 3-4 months. We've even heard wild exaggerations of how it is and is going to e. So now we're coming back out of the gloom. The Prudent Bear guys get paid to depress us. They're losing money and are desperate to get out with their hides. They won't even report good news because if we're back in a bull market they're out of business and wiped out.
I'm not saying we're going to the moon here, but this rally isn't finished yet. Maybe the leaders are starting to get toppy but that's why they call them leaders. Now the 2nd tier hasn't finishd running and the third has just begin. Each tier has its leaders too and its followers. Like the NFL Draft today if you miss the guy you wanted you pick the next best. The next-bests are just beginning. And like I've said the big telcos haven't budged a bit. Why? Because they're slower moving stocks. But they'll follow too. The turtles will follow the hares. And so will whatever quality dogs are left that haven't moved or have only just started to.
I will give you one thing, if we rally hard another week you may have some short targets to consider. But right now the bear market has not given us any proof that is it not over. This is clearly more than just a manipulated odd-ball bear rally. This is for real and it's supported by rate cuts, bottom re-tests and upside surprises from some of the biggest companies. The economy isn't great but it looks like it's out of the woods. And in time (6-12)months we'll have earnings to support that again. So investors are buying the future and disregarding the past. Your problem is you're still reporting bad news from the past, as if that matters much anymore.
In the meantime the PE's are looking out of whack based on 1-2 slow-dismal quarters. But the smart money is on future earnings and those PE's will come down fast again. Looking back at last quarter gives an investor no forward guidance at all. It was just an aberation. That can only be confirmed in the future but the writing is starting to be visible on the wall. And excess inventories will get burnt of very quickly here. AAPL's are already gone, for instance. Which is one reason it's leading now. And IBM never had a problem at all. Neiher did VZ or MSFT really. Only 2% drops in business. So things weren't so bad afterall. And nobody wants to miss what could be the most profitable recovery period of the next few years. This year offers the possibility of a 35-50% average gain (or re-gain) in techs, and more in the cases of beaten-dogs which recover. A LOR for instance could limp to $5 and that's 330% gain from here. Or a SCNT to $3 is a 300% gain. Or LU to $20 is a 300% gain from last week. etc. Who wants to miss those possibililties and go short with the Fed fighting you all the way? Not me.
If you're a skilled fast-triggered short artist go ahead , but I don't see any bubble yet and why short into another fed cut?
CIEN at 65 for instance may or may not be a bubble. Depends how you look at it. And in any case I don't buy the CIENS at 65 of the world. Never have never will. I'm a value bottom-picker kinda guy. and this rally is a bottom-pickers paradise. For once they're actually popping bigger than even the leaders, or starting to. And you can always park your money in a Baby Bell for a nice safe 25% gain this year (my projection only) and a dividend, so 28%.
Why don't we stop this as I'm repeating myself and you won't agree with anything I say nomatter how compelling the evidence? Like I said, in three weeks let's revisit the issue. By then we may have reached a short-term top after the next rate cut happens. Or maybe it will be hit sooner and you can crow to me in three weeks. But remember I'm not playing the high-fliers which have already flown. |
