Jacob, I think both you and Cary made good points here. It seems to me that the root of the problem here is that we are dealing with something we have never seen before. It is a "new animal", so to speak. Before 96 or so, when the internet became a big driver, we had PC cycles and semiconductor cycles that were easier to figure out. There were past cycles to look at for guidance. Netscape Navigator took the world by surprise, and the resulting shock waves are still being felt. Because of greed and stupidity, a very good thing (the internet) resulted in what may end up being one of the biggest speculative events of the last 100 years. The Y2K thing was also a factor (bad timing). Now the fallout from all this is enormous. But just how big is the question nobody seems to be able to answer. You may be right that stocks like JDSU will be down for years. But the internet is alive and well, and with traffic doubling on it every 4-6 months or so (whatever the correct number is), there is also a good argument that it will not take as long as many would think to reach bottom. There is also the argument that inventories will become obsolete fairly quickly, which will help clear the shelves for new demand.
I wish I knew the answers. Right now the bearish view seems easier to defend, but my opinion on this changes back and forth a bit. As was correctly pointed out, everything is interconnected now. Let me mention a few positives: low unemployment, massive rate cuts by the Fed, the consumer has held up (proving bears wrong so far), the efficiency due to technology, which should drive sales to some extent, tax cuts, the fact that there are no major wars, the demographic argument, and lastly, the fact that tech stocks are much cheaper than they were (many with low PEG's, if you can believe any of the earnings estimates).
Right now I feel like just walking away from this market, and checking back in two years to see what happened, and where my stocks are. I don't think I will do that, but the idea does have some merit.
John |
