Mike,
In my own business, I am noticing a mild pick up. I find this surprising since none of my clients are doing any better. Still, my personal sentiment is more positive now than it was a couple of months ago. So I for one can vouch for your assessment.
I think we are getting near the flat part of the U curve. Most businesses are still hemorrhaging, but some have turned a corner. We are far from a sector-wide recovery in any segment. But if you are a stock picker, you can do well.
I've been pondering for a week about the Fed and the market action tomorrow. I'd give it slightly better than 60:40 that the Fed will cut by only a quarter point. Figuring out the market's reaction is another story. On one hand, a quarter point would disappoint a number of people. On the other hand, the market may choose to interpret the minimal cut as a signal that the economy is turning around and the earnings will soon pick up. Alternatively, I know of people who are waiting for a rally based on a 50 basis point cut so they can sell into it (I wouldn’t sell if that happens).
Seeing how unable I am to predict the market's move, I made a list of stocks I will short if the market tanks and those that I will buy should the market rally. Longer term, I will invest in stocks that I see as value stocks.
I know that it is not a popular opinion at the moment, but I do not see the big semicap stocks as currently attractive. This is due to my inability to foresee a meaningful valuation over the next 2 years, which is as far as I ever dare to look into future. If I am wrong, I see AMAT going to 70. And if I am right, I AMAT will hit 40. The risk/reward is not as attractive as I'd like.
I think Warren Buffette had it right when he said, "I think the stocks will be boring for the next decade". So for now I will continue with my method of weeks of boredom fallowed by moments of thrill.
Sun Tzu |
