Lizzie:
"those aren't growth companies anymore'....
my point precisely, yet they continue to carry growth multiples. Falling multiples are a short's best friend.
I have no interest in being long or short PMCS, but I do know that former "darlings" can provide great short situations even at very low prices. Nortel was a great short at $4 (down from $120) as it continued to fall very briskly to a buck In shorting, "percentage-gain-over-time" is the name of the game and a fall from $4 to $2 is as good a percentage gain as a fall from $100 to $50, so long as it happens quickly.
Stocks heading into bankruptcy are often good shorts but once into bankruptcy protection they are often even better shorts as the probability of the common share holders getting squat are almost nil. I have shorted such stocks at $0.25 and made excellent profits.
I have the opposite view to yours with respect to tech being a good short at the moment. I think many tech end markets are saturated and in many tech markets, there is far too much capacity. Many tech companies have zero pricing power. As well, and as I noted earlier, there has been and continues to be a great deal of "channel stuffing".
If the tech market is in good shape, then it begs the question as to why the insiders are so insidious in their selling (currently the tech sector is witnessing near historic insider selling,..... as has been the case for many months).
Froth in the homebuilders as compared with the techs? Not if one looks at PEs,.... just the opposite.
I disagree with you most emphatically about the demand picture. It wasn't "artificially depressed" it was simply saturated through "commoditization".
I love the tech sector and I have been fortunate enough to have made a living in the sector for 25 years. And I do agree with you that new technologies do emerge that change the way we live. It is for this reason that I have raised consequential sums of dough for early stage tech start-ups during all of those years. That said, it pays to keep a finger on the pulse of the economy,.... as even the brightest new tech company will have a difficult time emerging and growing in a crummy economy. At this end, it looks like the fall of 1987 to me,.... and I sure hope I am wrong.
Best, Earlie. |
