re: I'm not sure of the timeframe
If your timeframe is less than 3 years, then EMC at 25-30 may not be a good buy.
One by one, every company that was supposed to be immune to macro trends, has disappointed. Remember how CSCO was supposed to be immune? And this recent warning by EMC ought to drive home the point. EMC management is explicitly making a connection between EMC's results and IT budgets, and making no claim to "immunity".
Longterm, yes, storage has to grow, and at a rate faster than for just about any other product. But......if consumer spending falls off a cliff in 2001, like business spending has, then we get a recession this year. Do you really think EMC's results will improve, if that happens? And, if inflation goes over 4% in 2002, and the Fed starts raising rates as aggressively as they lowered them in 2001, then stocks (especially growth stocks) aren't going to recover till........2003. So, a buy tomorrow has to be either a LT hold (>2 years), or a very shortterm trade. And I don't like it as a shortterm trade, if we set new lows. After new lows on new bad news and high volume, stocks typically do one of two things: a sharp rebound, recovering quickly back to the previous trading range, or........a slow fade to much lower lows. |
