Actually, an anticipatory investor must stay on top of events.
Had you followed economic events diligently, you would have been out of the market in August last year. That's when I sold most of my larger "trading" positions. It was August when it was clear a slowdown was coming. I expected a long a slow one. The rapidity of it surprised everyone.
You expect people to react to cuts immediately. I don't. I expect people to react to events as they relate to the cuts that were made. Were the market still crashing, it would be clear people spat in the face of the cuts. Instead, they recognize the benefits are still to come.
It didn't take any great insight to see more were coming. It doesn't take any great insight to see that more are still to come. What did take insight was not overreacting to anything. How many people sat here and assumed gasoline prices would be peaking around the July 4th period? A great number. I can remember hearing how $2 per gallons was assured by July, that the cuts would only exacerbate this problem, and this would actually have a great detrimental effect overall. I, for one, didn't believe it because oil prices had peaked some time before and were moderating. The Saudis had made it clear they would play their part to keep the economy stable (recognizing that high prices hurt them in the long run).
I disagree with your analysis of consolidation. Most of the hurt has already been factored in. The weak companies have already had their treasuries raided, the shareholders have already been slammed, and employees are already out, or on the ropes, in most of these companies. Consolidation, at this point, would help all of them. I have a friend who works at a fiber company who has made it clear that they are basically waiting to get bought out. This was a company that was once a shining light of "the new economy". They will get bought out...the question is when, by who, and for how much. At any rate, the only thing that can happen now that is worse than their current situation is complete bankruptcy. Chapter 11 is an improved situation for them(since they will be protected), and will buy them time.
Another friend owns a year old IPO that has suffered under the weight of the collapse. However, this company is about to turn a profit, and still has its IPO warchest. It is beginning its consolidation efforts. The companies it is purchasing were once formidable competitors that are now practically skeleton firms. Both purchaser and purchased are benefitting.
The firms you point to are in the midst of dramatic slowdowns, no doubt. While I am doubtful of this, many people claim the launch of Windows XP will cause an uptick for all of them since it will require upgrading machines. It could happen. I don't think it's going to be the catalyst, however. I think these are mature companies in a mature industry. To see how they will perform over the next 15 years(or less), you need to review what happened with car companies during the late 50's and into the 70's.
So...we continue to wait. I think the Chicken Little approach is overstated. Typically, just as people are saying that worst is yet to come, the worst has already come. This may be atypical. But so far, it doesn't appear it is. |
