. . . . Dow 10k at last. . . .
I still need 400 more to reach my year end target.
Rock, as far as beaten down techs. . . it really comes down to supply and demand. At the beginning of this bull run, demand was limited. . . so only the techs with the strongest fundamentals, plenty of cash, little competition and good growth projections turned our heads. These are the ones who find their legs first after a bear. Consequently, they are the first to reach full value. . . decreasing the supply of great undervalued techs.
As this bull progressed over the year, demand for techs with the better balance sheets . . and growth. . . increased. . . and supply decreased (as one-by-one they reached full valuation and relative over valuation). So what is left are those issues that were passed over because of competition, lagging profits, slower growth, etc.
I would check out lists of the largest tech stocks first. . . and compare them against performance of better issues. High tech communications stocks like Lucent, Nortel and Alcatel have all taken a back seat to Cisco (the new kid on the telecom block) in both the marketplace and in the market. This is an example of what I am talking about. There are others in other industries.
But you are more likely talking about finding the ones that will yield the highest MPGs. . . .Maximum Percentage Gains. And for that we really must turn to the junk. We did quite well over the years going in and out of some "extremely promising" junk.
I've always been a sucker for a good story stock. . . or for that matter, story industries. . . which we like to call "emerging technologies". Dotcoms then Broadband Telecoms. . .Fiber Optics . . . then Human Genomes and the Biotechs that benefit from the technology. The thing to keep in mind with these is that it is a snowball rolling down hill gathering investors with every turn. The trick is to get in when few notice it rolling. . . and stay until it is featured on the front page of Time magazine and Business Week. If you sell out the day they make that news, you will likely be within 10 percent of the top of that bubble.
There really is an art to bubble blowing. And that is what this is. The whole stock market is like vapor anyway. I mean who of you actually makes their living on stock dividends? So we make our dough by getting in before the pack and out when the pack is fully on-board. We have done that so many times, I couldn't say.
So what is the next wave? That is probably the best question to be asking. And more to the point, which of the next waves will capture the imagination of the public? That is what is needed to blow a new bubble.
Earlier this summer I asked top executives at Cray Research and Silicon Graphics what they thought of the prospects of nanotechnologies. You could hear it in their voices that they were excited about the possibilities.
The idea of sprinkling a battlefield with microscopic sensors that report troop movements. . and providing imaging of large equipment moving over bridges, etc. . . . is extremely attractive to the military of the world . . .or at least those with the fattest checkbooks. Delivery of drugs precisely to the organ in need is astounding. Accurately timed-releasing drugs and microscopic cameras are valuable tools of life.
I mean these are things that are already being developed. The truly extraordinary applications may have yet to have been dreamed up. But from a speculative opportunity standpoint, such stories are the stuff of which skyrockets are made.
The internet is still cool, now that it is no longer a "fad" . . . next-generation internet is still bogged down by lawyers, destroying whatever momentum it may have had. Genomes are still potent, but investors associate genomes, broadband, telecoms and fiber optics with the dotcom driven "last bubble". . . giving them a foul taste in their mouths.
For a "next bubble", we need a new story. I believe nanotechnologies and their numerous possibilities. . .limited only by human imagination. . . will drive the next bubble.
Note: Nanotech actually started running during the last bubble. But the PUBLIC did not pile on. So to Average Joe Investor, it is still something new. . . and something mind-boggling. With every story about it, the imagination is piqued.
I hear analysts talking about a current bubble. Yes, we are going to get a spanking in January, in my opinion. . . but it will be more of a "correction" than a burst. . .since this is hardly a market bubble. A true bubble is far more verticle and rushed.
So what is there in nano that is worth considering? Well, some of the BEST stocks in the industry are IBM (the inventor of things nano. . .a major patent holder) and INTC, XOM, HPQ and DPMI who all receive tremendous competitive benefits from their vested interest in the technology.
Of course these are not the sort of stocks that bring us to mind of the old TUNE, ATHM, CIEN, BRCM, ADAP, BAMM, BRCM, LPTH or any of the other rockets we enjoyed. But consider that those stocks, which provided some of the highest profit percentages, are rather insignificant or gone now. Food for thought. Likewise, the issues to make the biggest percentage gains next time around will not be those well respected names from the first list.
Instead, it will likely be the pure plays with the best stories and Wall Street hype. . . .like always. So what is in the Nanotech sector? Well, if you have the time to read this, I'll keep writing. . . .
VECO, NANO and NGEN are the tool makers for nano. Tool makers are historically the first to run. These three have all increased between 125% and 238% in the last 52 weeks. Of this group, VECO is the biggest at 3/4 a billion in market cap. NANO and NGEN are still under 200 million. . . telling me they have more room to grow.
Next are the application issues. These usually run the hardest. Pharmaceutical nanos are great stories. . . evidenced by FLML, which already rose about 650% in past year. SKYE, a European pharmaceutical, has not moved as much . . but is valued at 827 billion. They have released some interesting news. Not much there.
A sleeper in this group is WEDX, a recent Canadian biotech. . . which "only" rose 140%. JMAR is about lithography . . .too boring a story, in my opinion . . reflected by its 49 mil mkt cap. NANX is a Nano Solutions Engineering company. . .meaning they develop nanotech products to assist other companies. . . giving them a book full of stories. Also a sleeper at 113 mkt cap and having only doubling in past year.
The incubators are typically much slower to move, as their actual "value" is often vague. TINY (Harris & Harris) is a venture capital company that focuses on nanotech stocks. These serve to balance out a basket. . .and the case of CMGI can provide a nice pop now and then.
Anything above this sentence I would (and/or have in the past year) either invest or trade. The Nanotechs BELOW this line may still have significant legs. . . however, one must draw the line somewhere. ALTI has legs, but is a MINING stock based in Reno, Nevada. Sorry, but I have my principals.
FEIC? Well, honestly I cannot understand how its particle beam technology relates to nanotechnology. The whole corporate concept is simply too confusing. This one already has a 728 mil mkt cap. . . probably why it only rose 33% in past year.
Bulletin Board stocks are very rarely a value, since they "are" whatever they say they are. . . (to borrow a phrase from Emimen). MFIC.ob (Milling and Grinding), SOTK.ob (Atomizers and sensors), NPCT.ob (based in Denver!. . nuff said), EMFB.ob and NNPP.ob round out the list of publicly traded nanotechs.
To truly "invest" in this technology, you must go with one of the top companies that invest (from initial list). The BEST pure plays are all private. Period. Located in Silicon Valley.. . there is a whole flock of them with truly promising technologies. These could very well fuel a nano-bubble.
Notice that when discussing high percentage gainers, I do not consider valuations per se. The herd piles on a good story. If 1 in 100 even checks the valuation I'd be surprised.
It is important to also note that the Herd is not dead. Most of it has been working since the deflated tech bubble and have a large amount of money available to invest. Have they really learned their lesson? No, I seriously doubt it. Will they jump on board the Next Bubble. Oh, absolutely. Will those who lack the savvy of the seasoned trader lose their money? Most definitely. Has much changed, since the prosecutions, investigations and new rules? Certainly not.
I am obviously as cynical about the markets (and those who drive them) as always. But I am still a capitalist and not above grabbing some profits from Wall Vegas.
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