Mohan, I read a little of your conversation on SOX selloff regarding if its a sector rotation or indicative of direction other sectors of "the market" might take.
The Asian trade relationship is heavily weighted to technology exchange, both in production and as the emerging growth market. Its logical that currency gyrations would impact this relationship greater than other sectors. Following on the heels of the currency troubles slower growth predictions added an element of panic similar to first hearing your house is worth less, then hearing the local employment picture is nothing but layoffs.
We have a tendency to focus on the techs, ignoring other stable and growing areas fundamentally unaffected by what's going on. Indeed the selling, in my opinion, will begin to turn the corner Tuesday /Wednesday timeframe. The Hong Kong situation in particular bears watching. The real estate values are certainly overvalued still and should continue to flatten over the next year, but the political economic miracle has taken on a larger role as agent of trade and markets for China. 200 billion in reserves can't be ignored in Hong Kong, greater on the mainland.. and I suspect a speculators' trap could be in progress. Remember some of the traps executed by Fed agencies in the US in coordination with Japan, Great Britain, Germany and other countries.
These four points. A.. the narrowness of focus on techs here B.. the technology focus of SOX type stocks C.. being impacted by major currency re-adjustments and speculation and D.. the tentative forcast for less dramatic growth, which in fact is still dramatic growth by most all industry comparisons... creates some myopia.
We do need to diversify porfolios and realize techs rise and fall, but they will certainly not fail to produce for long. Technology has a way of making itself obsolete, thus replenishing its own opportunities.
Jim |
