Speaking of light bulbs, from the mouth of Fleck himself ( I know, I know, sometimes it's hard to tell which end that is with this guy..)
This is from today's Worth e-mail newsletter..
He is, in his own words " very sick and tired of this nonsense " <<VBG>>
Thursday, April 2, 1998
To short sellers, this market is a "madhouse"
Despite poor fundamentals, they say, stocks continue to surge
forward - and it's costing them a fortune
By Michael Brush
It's not easy being short these days - in the market, that is.
Talk to just about any professional investor who shorts stocks --
or makes bets that they will go down in value -- and you can feel
the sense of frustration. With stocks reaching new highs each day,
often regardless of underlying business trends, short sellers are
throwing up their hands in despair.
Their main gripes: Investors have tossed out the basics, like
researching fundamentals, to make room for a "nothing can go
wrong" mentality that has them throwing money at the market in a
speculative frenzy. Hubris factor of 12 on a scale of one to ten,
they say. Completely idiotic and manic. Like being in a madhouse.
"I've been doing this for three years, and never has it been this
insane," says William Fleckenstein, of Fleckenstein Capital in
Seattle. "The facts have nothing to do with anything anymore.
Being right does not count very much. You have to be right when
people are not in the mood to come up with 15 reasons why serious
problems are only temporary."
Case in point: Fleckenstein thought he had a lay-up Wednesday
morning after semiconductor equipment maker KLA-Tencor Corp.
(NASDAQ: KLAC) announced sales for the first quarter will fall 17%
because of a slowdown in the sector. Wrong. The stock closed up $2
3/4 to finish at $41. "They announced horrible results, and it
went up anyway."
It has been the same story with other stocks he has shorted like
Ultratech Stepper Inc (NASDAQ: UTEK) PRI Automation (NASDAQ: PRIA)
and Applied Materials (NASDAQ: AMAT). "Virtually every company in
the semiconductor capital equipment making business is terrible
and getting worse. Announcing bad news. But most of the big ones
are up."
Same thing with companies like Motorola (NYSE: MOT) and Intel
(NASDAQ: INTC). Both of them have preannounced bad earnings news
in recent weeks, but fared fairly well anyway, instead of
suffering the kinds of big losses short sellers say they would
have under different market conditions.
"Intel is in its worst business position in ten years," says
Fleckenstein. "But it is trading sideways. And that is a moral
victory. I am very sick and tired of this nonsense."
You can understand why. After turning in three excellent years
shorting against bull markets, Fleckenstein is down so far this
year "in the teens." But he is not alone. The five short sellers
tracked by Evaluation Associates in Connecticut are down 9.8% as
of the end of February. That loss is probably a lot higher now,
given the strong market performance of March.
Part of the reason that stocks keep going up even though their
fundamentals suggest they should be going down is that mutual fund
managers want to be fully invested to beat their competitors,
short sellers believe. "They are buying this stuff because it
looks good on the chart. No one is doing their homework," says
Fleckenstein.
And that is causing a speculative buying frenzy, he says. "I talk
to a lot of people who don't know anything about the businesses
they are invested in. I am not saying they are stupid. They just
don't know anything about the businesses. And when you buy
something you don't know anything about, that is 100%
speculation."
SORRY FLECK -- SPECULATE CYMI FOR A WHILE... |
