Sonki, I tend to think we are in an oscillating mini bear market in tech that won't really end until the spring. That said, it can be profitable to buy the better cos that aren't likely to REALLY blow up on the downsides of the ranges. But the risk is the tendency in this market for cos to blow up.
Imagine, for example, the impact of an earnings warning from say Csco...
I STILL don't think the market has fully discounted Asia...by a long shot. I expect 140 yen/dollar. That alone will kill many cos earnings comparisions. I think Korea and SE Asia will stop buying foreign goods/oil almost completely for a while. Not slow down. STOP. THAT won't last forever, but it is hardly now discounted. ANd when it is, there will be the fear that it will last much longer.
The MULTIPLIER effect of the Asian slowdown does not seem to me to be factored in yet. I.e., first we just measured SE Asian export exposure. Now it is all E Asia... but what of the cos that supply the exporters. And not just supply parts say for the export products themselves. If Catapillar or Alcoa are selling a lot less to E.Asia, or now really fear they will, do you suppose they may cut back their PC upgrade / database upgrade program a bit. ETC.
First we were hearing a .2-.5% impact on USA GDP, at most. Now we are hearing up to 1%. I think that goes higher.
But real impact will be on corp. profits. Which were due to slow anyway.
So I think this is a trading market at best for six months or so. At best.
There is an argument for buying drugs w/PE expansion in sure earnings. But wonder if even their the Asian situation slows addoption of new premium priced US drugs, etc., for a while.
[What people seem to not understand is that Korea's financial situation is much worse than US's was during crash of 29. Proably Japan's bank situation is worse also. What is different is that whole world is not in same situation, and US central bankers, Treasury Secretary are MUCH smarter than then. But there is HUGE asset overinflation, huge DEBT illiquidity over there.]
Doug |
