Mr. Dipy: I first started reading the messages on this board in October 1997, when you were predicting that LSI would fall apart. At the time the stock was at 12, and you were saying that it would hit 6. Of course, LSI went to as high as 180, so you were very very wrong.
Now the stock is back to 12 (split adjusted of course), and you are still negative. What does this mean. Only that you have been negative on the stock, and the market when it had a significant move to the upside and negative on the stock when it made a significant downmove. Yet throughout this time period, you never referred to the "Internet Bubble" as a bubble until after the fact. Nor did you ever refer to deflation as a problem until recently. Thus, what you represent is just an always negative outlook on the market, which is fine, but that does not represent an educated outlook, just an outlook that will never change. That means that your outlook is less a matter of real thought than an after the fact negativism.
Luck plays a role in the market. That is a truth. But a person can still make more money than the average investor if she really analyzes where we are at in the market. And here is why the semiconductor market, and the stock market in general is poised to go much higher over the next year or two.
1. The proper way to buy semiconductor stocks is based upon price to book value. And right now the price to book value of semiconductor stocks is near an all time low. If one buys semiconductor stocks based on earnings, she will be buying at the high of the market or at least near it.
2 The market is still near an historically oversolf condition as measured by the ARMs index
3. We are still in the golden era of semiconductors. For example, we haven't even began to work with semiconductor technology in their application of taking pharmaceutical dosages. Nor has Moore's law yet been hit. The potential for significant long term growth still exists.
4. Since 1987, the Naz has returned 8% year over year. This is a very reasonable return, so any excesses in the Naz have long since left.
5. The 800 pound gorilla is supposedly China with its educated work force and its cheap labor market. But it is also a potentially huge market for goods, and with the United States still the leading innovater, we will benefit from economic improvement in China.
6. The lowering of interest rates to the current levels mean that the Fed Model for stocks indicates that stocks are significantly underpriced, and the fed model has worked very well over the past 30 years.
7. Telcomm is beginning to come back, and this is an area where LSI is particularly strong.
8. One of the reasons for the Y2K Naz bubble (and the year before) was the Y2K fears among busniness, which generated excessive buying among businesses. Thus, it was a certainty that there would be business capital expense pull back for the next two to three years, and that pullback is now about to end. This means that there will be new business expenditures that will drive up demand and stock prices.
9. Semiconductors are still the leading edge of the market, and when the economy is ready to rebound, it is semiconductors that are the first to rise. As such, now is the time to invest in semiconductors.
10. Japan's bubble was significantly different than the Nax bubble. There was much greater underlying weakness in Japan's basic economic structure, Japan as a country has not grown, leaving it to be an exporter of goods, rather than a consumer of goods, and Japan's primary bubble was due to excessive asset appreciation in real estate. These conditions do no exist in the United States.
11. We are still suffering the effects of post 9/11. Business travel is down, while at the same time governmental expenditures related to the war on terrorism are still relatively small. With a Reublican Congress, that will change.
12. As far as too many Bulls out there, that contrary indicator failed terribly in 2000, when services such as Hulberts indicated that the market would continue to skyrocket because there was no enough positivism among advisors, and since not advisers were positive, then the reasoning went, the market would continue to go higher. The truth is for the most part the advisors who were positive two years ago are still positive, and the negative advisors are still negative. So that contrary indicator is now worthless. On the other hand, if you want to look for positvie sentiment on this thread, the simple fact is that there is none. Most of the positive posters have long since disappeared, and even Addi's sentiment is negative. Online investing is down by 70% over the last two years, and of course the Naz has fallen by almost 75%. The fall in the Nax does not even take into account the many dot com failures that were not a part of the Naz composite, so the fall was probably even greater. This means that the excesses are out of the market.
13. The GDP ratio to stock prices is not overvalued as it was during the Boom, and it is a much more reasonable ratio.
14 I just invested a lot of money in LSI, and I really really want to make money on the stock.
Lady JH |
