interactive.wsj.com
An excerpt from WSJ. It somehow fits here...
"This is going to be a year of gyrations that get bigger and bigger," says
Richard Bernstein, chief quantitative strategist at Merrill Lynch. "The
problem is that earnings expectations and other fundamentals are changing
so dramatically that there's no certainty surrounding any stock." That, he
adds, makes investors more willing to chase advancing stocks higher, only
to dump them on the slightest change in outlook.
Sector rotation has been a hallmark of the bull market of the last three
years. But traders and investors say these swings seem more violent and
more short-lived than before. They say this "manic-depressive" market
pattern is due partly to the new records recently set by major indexes, as
well as the uncertainty surrounding valuations. "It is amazing how vicious
this rotation has become," says Seth Tobias, a partner at Circle T
Partners, a New York hedge fund. "Woe betide you if you're on the
wrong side when the hot money starts chasing something higher and you're
on the wrong side. And that wrong side could be right the next day."
To cope, Mr. Tobias tries to spread his buying among a number of stocks
in the same industry, rather than try to pick individual companies.
Sometimes these stocks move as a group anyway, he says, as with
semiconductors or airlines. It's easier to own a group of personal
computer stocks, and watch one after another come into favor, than try to
chase them one after another. |
