"If you're inclined to bet on history repeating itself at all this summer (although there doesn't seem to be much reason to do that in these absurdist times), I present a few of their factoids for your consumption, and my fearless predictions for this summer's chances of favoring the odds.
* Historically, computer services companies are the safest summer tech investment, rising in 9 of 12 summers. They could very well be so this summer, if investors look to services companies as early beneficiaries of a strengthening economic recovery. It's not happening yet, though. Market leaders Accenture and EDS (NYSE: ACN, EDS) were down 9.7 and 29.4 percent from May 31 to June 27, respectively.
* From a risk-return standpoint, communications equipment has been the worst sector, with some of the lowest returns and the highest volatility. While the "return" opportunities may be few and far between, this sector has been beaten down so much it's probably got a better risk-reward profile than some other sectors. Why, for example, would a short-seller even bother with WorldCom (Nasdaq: WCOM), which was at $0.83 at month's end?
* Software tends to be the weakest sector in summer, with an average return of just a 1-percent gain, and odds of an up summer only 50 percent. Given the ongoing difficulty of the selling environment and investors' tendency to believe the worst, this could easily be true again. The market needs more than one good data point to get behind these stocks. While Oracle (Nasdaq: ORCL) had a standout month in June, its peers PeopleSoft, Siebel Systems, and SAP (Nasdaq: PSFT, SEBL; NYSE: SAP) all followed the market down."
redherring.com |
