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Technology Stocks : Semi Equipment Analysis
SOXX 288.52-0.3%Nov 14 4:00 PM EST
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To: Donald Wennerstrom who wrote (12387)11/5/2003 7:33:16 PM
From: Sarmad Y. Hermiz  Read Replies (3) of 95420
 
>> but wherever the peak is, I think it will be after the first of the year - how much further after the first of the year is probably highly dependent on Fed actions in the future -

Don, I think you are right. And I am re-evaluating my plan.

There's this gathering storm on the horizon. Higher interest rates that will happen no matter what the Fed tries to do.

I believe that the reason interest rates are low is not some magic potion of the Fed but that China and Japan have been willing to absorb all the dollars the Fed prints. And that Arab oil exporters have been re-investing their dollars back into the US. This latter return of dollars will keep happening. But China/Japan absorption of dollars will be exhausted at some point. But when is that point ?

I think the Fed will try to increase rates gradually. At 0.25% at a time. But as the treasury continues to borrow new funds and roll over more trillions, rates will escalate suddenly.

At this time, I'm not disposed to hold stocks past the first Fed increase. I thinks bonds will get killed on that day. Stocks will fare a bit better, but my expectation is that reasonable rates (6% CD's) will draw money from stocks.

I am expecting very good labor reports tomorrow and Friday. And if we see that nasdaq 2000 on Friday, I'll likely raise a good percentage of cash.

Well, I hope you're long on something. 'Cause tomorrow tech stocks will fly.

Sarmad
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