<<any chance i can buy sunw at $6? ... (and) do you still belive what your wrote here? or is the rally over?>>
Hi Sonki, as you indicated, I said here recently (August 2), "Equities will continue to rally into early or mid September ... maybe up quite a bit overall from now to then or plus 20 to 25% from August 1."
Do I still believe that? Yes, but I better make clear what I am trying to say ... especially the big picture.
(1) I think you know that I am not, in general, a day to day or week to week stock trader. Short term trading is the most difficult way to make money in my opinion.
I try to be a buy and hold for the long term type of investor, but I put a lot of time into studying the practical aspects of macro and micro economics so I can target and try to catch the big swings in the market. During the mid 1990s, when I first got involved in equities in a serious way, there were very few big market swings, but since early last year, things have become much more difficult to figure.
(2) In the fall of 1999, I started to get bearish on the overall market, not from a fundamental viewpoint, but because I thought that P/Es, especially in the technology area, were much to high relative to history. I started to sell some SUNW then, and by late January, I was out completely. It was a gigantic position for me (7,360 shares at the time that would be 14,720 today), and I was out early as SUNW did not peak until late August.
(3) By July 2000, I was so bearish on the U.S. economy that I started buying S&P puts - which have done very well (although not since April of this year).
(4) I am still bearish on our economy and U.S. equities. Whether the market breaks the April, 2001 lows now or in the fall is not the point. Investors still believe in (a) buying the dips, (b) Greenspan will save us, (c) the bottom is in and (d) the recovery is right around the corner. I think that all of that is bull-shit. When the American consumer and the small investor finally realize that the turn around will probably not be until next summer, at the earliest, and possibly the following summer, then, and only then is when the market will move straight through the April 2001 lows ... probably back to where prices were in September, 1998.
(5) Worse, people are afraid they will miss the bottom, which I think is equally stupid. Whenever we reach the bottom, I seriously doubt that we will start to move up in a serious way for another six months to a year.
(6) Would I buy SUNW at $6, if it gets there. I don't know. Certainly not a large position, as I sense the landscape changing. Would I own CSCO? ... no, I don't think so. It seems like the stocks to own in that space are Cienna and Sycamore Networks, although I would do a lot of studying before I bought any of them.
Sonki, I have gone on and on here, and I apologize, but mostly my view is that we have been in a very dangerous period since early, 2000. The fact that the DJIA, NYSE Composite, S&P 500 and Nasdaq Composite are still as high as they are is the proof that the average investor just does not understand how much danger he/she is in right now.
If you have a special situation, as I believe I do with Abiomed, no problem with bucking the odds in my opinion. Otherwise cash is king for me, as it has been for the last 19 months.
I am going to add a caution ... Disclaimer: The above is my personal opinion. I recommend that you do not base your investment decisions solely on any one person's views or analysis (including mine). Do your own research and take personal responsibility for your investment decisions.
Ken Wilson |
