re: Cisco treat:
I am very encouraged, by comparing the charts of CSCO, vs. major competitors like NT and LU. CSCO bottomed after 9/11 (no need to state the year). The last intermediate low (14.15 in 2/02) was 27% above the post-9/11 low (11.04).
Meanwhile, the others have taken out their 2001 lows, and continue to set new multi-year lows.
Clearly, the market is differentiating between CSCO and the rest of the telecom-equip sector. The sector is still out of favor, but, IMO, we've seen the (I mean THE) lows for CSCO. The trend for CSCO is flat or up. Not down. We may retest 14.15, but I think the odds are very low, of taking out 11.04.
I saw the same pattern in 2000, in the manufactured-housing industry. I bought the highest-quality company in the sector, CMH, when it stopped going down, while the lesser-quality stocks in the sectors were still declining. From mid-2000 to mid-2001, CMH was my biggest holding. Now, I'm very comfortable with CSCO as my second-biggest holding.
I'd also say that, if anyone wanted to bottom-fish in JNPR, they've just set a double bottom with their post-9/11 low. I'd pick them over Lucent or NT. But, since I always buy the best (and willingly pay for quality), I'm only holding CSCO. A comparison of these charts, leads to the conclusion that the market consensus is: CSCO is the quality stock in its space. |
