OT re economy:
Yes, that's quite possible. The lower oil prices has an immediate effect, while the tax cuts get phased in over 10 years, and really don't do much of anything this year or next.
The collapse in commodity prices (oil and everything else) is somewhat mitigating the effect of no one having any pricing power for finished goods.
For all this year, the professionals have been plugging the variables into their equations, the equations that predicted past patterns, and coming up with forecasts for consumer spending. And, those forecasts have consistently been too pessimistic. The models have a systematic error in them. Maybe it's just a lag effect of the Bubble, people keep spending because they remember how rich they used to be. Maybe it's because we haven't had a deep and long recession, one that really hurt, since the early 1970s, and no one remembers what it's like. Maybe it's just our innate American Optimism and ShortTermThinking. Maybe it's something else.
I'm hoping we get into 2003 before the Fed ends the party by raising rates. That would allow me to hold what I bought in 9-10/01, till 1/03. I hate paying ST cap gains. One of my "triggers" for beginning to sell longs (or hedge with QQQ put LEAPs) is a third Fed rate hike.
Again, I am not wedded to any of these scenarios. I think it is useful to identify the warning signs, the important variables, that change the odds of various scenarios happening. But, the range of possible futures, where the economy and stocks could be in 12 months, is very broad now, broader than it usually is. Which will make for continuing volatility.
There are 3 types of risk in holding a stock: company, sector, and market risk. Right now, I think most of the risk is market risk, for AMAT longs. That is, the company is certain to do well in it's industry, and the industry will do well, as long as the overall economy does, and as long as there are no more "exogenous shocks" that make all stocks plunge. |
