Lots of FEAR out there...and it's growing. We could see some much lower prices as fear spreads -
Except for the Asia crisis and LTCM, we haven't seen many long fear cycles since the late 90's.
and FEAR of FEAR - you think some other mutual fund will get scared about a sector, so you decide to get out FIRST. Right now, the fear is in Utilites and trading companies (thanks Enron), a little in money center banks (JPM/Chase & Citibank), and a little in consumer finance (PVN (Providian sub-prime credit cards)), before that Bank of America's sub-prime auto biz last spring), and maybe a little in retail (GAP stores).
We will start earnings warning season, and analysts will be making their forecasts for next year. Most analysts don't want to look stupid after Enron, so they may be very conservative in their forecasts....maybe someone will try to be a reverse Henry Blodgett (Blodgett was an analyst who forecasted Amazon would go to $200 when it had just crossed $100 - and people read it, couldn't believe it, but AMZN did in a few weeks. Blodgett gained a HUGE rep, and made even more money)
We could see a big, long deep fear cycle, or several cycles. FEAR will sell newspapers - I expect the media to hype this up...
So maybe we should not try to catch falling knives - wait until the fear has run it's course, and the stocks are flat or turning upward ? There were 5 rallies of more than 20% between 1929 and 1933, including the first big one of about 70% up.
Yes i'm short ;-) Best of luck to everyone...energyplay |
