Pat,
Thanks! You did not sound harsh at all. No matter what the fundamentals tell you, the market's perception of a stock's value can be far different as evident from Technical analysis. Hence my interest in technical analysis as a way to understand the market psychology. If the market psychology is understood, and if one's own emotion is under control, the market becomes a toy for mainupulation. However technical analysis or overall indexes can only represent the crowd psychology. Individual businesses may or may not follow the crowd. Certain stocks (with due justification) got hammered during this correction and some have revived after the correction, some have not. It was time for correcting those excesses (excessive margins, short interests, etc.) with kind contribution from Federeal Reserve. Some stocks have gone up. Why? We don't stop eating, driving, flying, visiting hospitals, calling friends, mailing those bills, etc. Economies in Asian countries are on the verge of exploding. If US competes with Europe in lending at about 6%, countries like Singapore has much more funds available at much more competitive rates. What happens when so much money ia available? They tend to fuel manufacturing - consumer products, technology, energy, etc. Several companies are going global these days in spite of problems with local political situation. Procter&Gamble, Motorola, ATT, Enron, McDonald's, Pepsi, Coke, United Airlines, etc. and so are drug companies with their royalty payments. Most of these countries (Asia, Latin America, Africa) may sound poor on local TV news, but they have hard cold US $ to buy goods from US or anywhere (and their gross domestic product may be growing at a much higher rate, almost more than double of US or Europe). People in these countries will become consumers when their spending power goes up. Those who surmise doom may be right in that US corporation have to work harder to keep up the earning stream. Technical analysis might predict it as crowd psychology changes. It is my belief the well-managed inidivual businesses will survive and even prosper. Long term holders of these businesses will be rewarded in time. I agree that there more frequent opportunities for trading (and helping Uncle Sam with tax funds to balance the budget?). It takes some experience and art to call the timing for these trades.
Where all this has to do with NMPS? A company that has an inexpensive, noninvasive diagnostic tool to detect cancer will do well in any country. NMPS can license through any big drug houses in US and abroad, we'll see earnings to go up. As long as the company keeps innovating and inventing new drugs, their bottom line should get stronger. In Peter Lynch books he shows one graph after another for 10 years or so: stock price and earnings. All those graphs show that the earnings tracked the stock price.
That is enough for this Sunday evening. I enjoy these discussions, hope others do not get annoyed by this post. Long NMPS! |
