<<I'm cash poor at the moment>>
OK Bob, I'll only say this once. This is a bad idea right now. If you can't stand to hold cash, at least short a couple of the weakest issues. If I were long Cymer I would probably short at least a little ASM. This is a really good time to hedge your bets. If you think the sector is at the bottom -- and I'm a terrible market timer, so I'm probably wrong this time too -- by all means pick your horse, but don't get so wrapped up in it that a big plunge is going to kill you.
I'm holding 20-25% cash and only a little semi equipment stock. I won't make a fortune in the next month or two (unless I luck into another DGIV) but I'll still be smiling if the Dow goes to 8000.
While the US economy is strong, the current valuations on the S&P are extremely high in historical terms. This may be a new benchmark, I realize, but they are not making much sense stacked up against declining earnings and the high likelihood of more trouble in Asia.
If I were invested at 100% or higher, I'd keep a VERY watchful eye on macro-economic reports, especially the divergence between long and short-term interest rates. A rise in short term rates will cause a bump all by iteself, but if short term rates rise and there is no corresponding rise in long-term interest, I'm getting out completely to see what shakes loose. This has always preceeded disaster.
Also, of course, I'm watching indices such as labor costs vs. productivity, insider sales rising over 3x insider buying, ratio of reporting firms exceeding earnings estimates to those falling short, etc.
I like IDTI's chances right now, but a big correction will take down even excellent issues. |
