JWCB: I wish you luck in your search for that biopharma job. I know you'll land it. And Boston seems a whole lot better than Pittsburgh. Sorry I didn't pick up on your email to me, but I'm pretty lazy about that. I agree about biotech as being the "leading tech" play out there over the long term. Those firms that can get drugs to market will have excellent growth stories and patent protection. One of my favorites is IDPH as they have 2 cancer drugs on the market - not too many firms can say that although IDPH is a volatile little sucker. Anyone of a number of companies can make a server, PC, or communications chip. I was looking at NVLS the other day for a short trade, for example. The company comes out and says it will do $10-20M more next quarter than the last (about $160M). Not bad one would think. Semis are hot and the world can't move forward without them. So say the bullish pundits. The problem is that they won't hardly make any money. No big deal in bubblemanialand. The stock traded up almost to $55/share on Friday. During the height of the 1999-2000 bull craze, NVLS was doing about $440M in revenues/quarter and earning about .75c/quarter. That's the best NVLS has ever, ever done. The stock hit a historic high of $68/share back then. Friday, it's trading almost at $54-55/share with 36% of the revenues and hardly any earnings compared to 1999-2000. Okay - let's assume a 2nd half recovery. Is NVLS going to reach those former 1999-2000 levels. No fuc*ing way. But the markets don't care. This is bubblemania #2. The Fed is inflating so much trying to prop this economy up, that the US dollar is going to be in a world of hurt eventually. I don't know when. So folks are willing to pay 60, 100, 200 P/E's for stocks because they feel they're missing the melt up built of sand. Now they bringing out the old Street folks who fuc*ed us before with their dreadfully wrong predictions like Abby, etc. Time to distribute paper to the small speculator, I guess. That's not to say that this bull run is not over. When you distribute some worthless paper sh*t, you might as well get as much as you can for it if the public begins to believe in your forecasts again.
I was listening to a very wise "value" fund manager the other day. It was quite interesting since value is taking a back step now to growth. They asked him is CSCO a buy at $16-17/share. He said that the market cap of CSCO is about $125B currently. The choice he said was it wiser for someone to buy the company for the $125B or put $125B into interest bearing instruments and earn a 5% return. If you went with the 5% return you would get roughly $6B/year in interest earnings. NOT IN ITS BEST YEAR, DID CSCO EVER EARN $6B in one year. Not even close. You can plug that formula in with many companies and come to the same conclusion. So this market is extremely overvalued IMHO. But that doesn't mean more lemmings won't continue to buy and drive stock prices even higher. Now it's all about psychology, sentiment and P/S (a relatively new formula perpetuated by the Street to the public in an attempt to prop this market up). Yeah - someone sharp came up with that one. Remember the Peter Lynch ads - it's all about earnings - earnings drive the market. So someone on the Street says we don't have earnings. How can we sell the public some stock? So someone says sell it to the idiots based on a price to sales formula. What the hell does the public know. They can't even name the V.P. of the U.S.
Anyway, that's my tirade for today. I hope and wish good things to you old buddy.
jmanvegas |
