Brian, You are right, there is a fundamental problem here. On the one hand, certain technologies or certain sectors of technology can become unraveled, and if you invest in such areas, you are out of luck. Also true for certain individual companies in good sectors of technology. But on the other hand, if you invest in solid, well managed companies in growth areas of technology, you will tend to get a great price if you buy them when all the information is negative. It is like a little game Wall Street plays with us. They try to get us to buy when the stocks are sky-high, and to sell when prices are at rock bottom.
At the bottom, you can hardly read anything positive. All the good arguments are forgotten, but bearish views appear from all over the place. So the trick is to separate the good areas from the bad in technology, the good from the bad companies, and to try to buy these companies when the world is ending, so to speak. The analysts are our enemies in this game, as they try real hard to get us to sell at the bottom. It does not seem fair, they have research departments, they spend full time at it, and their views get media attention. Somebody said that in a bull market we don't need analysts, and in a bear market we don't want them.
One thing I would love to have is some way to log onto the internet as it was at previous peaks and valleys for the market and for individual companies. I would like to see just how negative everything was at trough valuations. I have used the example of Intel a few years back. Negative articles about Intel in the WSJ back then, and the constant hammering from Tom Kurlak, the former high-flying semiconductor analyst, caused me to finally sell my Intel. It proceeded to go up four times from them in the course of about 2 years. That is an annual growth rate of about 200%. But according to Kurlak, Intel was about the worst investment you could make back then. And it wasn't just Intel, it was declared that the PC is sort of dead, not the place to be. I think bandwidth related stocks back then were considered to be one of the places to be in fact. Now bandwidth related stocks are considered dead money for years, and we should buy Krispy Kreme maybe, or stocks like that.
Are bandwidth related stocks like JDSU, GLW, CIEN, NEWP, TQNT, VTSS, PMCS, AMCC, BRCM, CSCO, JNPR, etc. a good area to invest in at this time? One could question both the sector (i.e. growth rate of the internet and for bandwidth), the companies, and the timing. GLW, one that I am currently betting on, is now down to about 1/8 of its high back in September, and about 1/5 of its January high price. The company has been around 150 years. They have earnings still, and in fact an attractive PE, P/S, P/B, and PEG. Maybe all these numbers are meaningless because the demand for fiber and bandwidth is going to fall through the floor over the next 3 years or so, but if not, this company could be a great buy here.
I am starting to wonder if I should just start shutting out most of the news and the media, and just start looking at prices and long term trends. It seems the more you read the more you tend to do what they want, which at times like this means to sell at the bottom.
John |
