WHAT DOES A 40-60% MARKET CORRECTION HAVE TO DO WITH RAMBUS?!?!
Well if that correction comes this year, as I'm beginning to think it will, RMBS could very well turn out to be the BEST place for long-term money!!!
Back in early 1995 I accepted the "DOW 10,000 NASDAQ 2,000, by the year 2000" mantra, and have profited handsomely over the past 3 years! However, DOW 10,000 in 1998 is looking VERY possible and has caused me to rethink some variables and assumptions! WE ARE GOING TOO FAST!!!
The latest evidence of an over-speculative market and a market topping pattern appeared in the past few weeks...internet stocks have shot up to TOTALLY UNREALISTIC levels, the "big boys" have finally started searching the Russell 2000 for bargains en-masse, and the Bears have all gone into hibernation at once! I'M STARTING TO GET NERVOUS!!!
A 40-60% correction from the 9,700-10,400 on the Dow I'm forecasting for this year means a drop of over 4,000 points...all the way back below Dow 6,000 and Nasdaq 1,200! More importantly, it means that we will be looking at a prolonged period of more than 8 years (some forecasts are predicting 10-12 years!) before we will recoup that loss!
Which brings me back to individual investing strategies. Long term investors should beware and take precautions to protect their assets...and remember that "BUY & HOLD" can EASILY turn into "BUY & FOLD"!!! Short term traders should bag their profits quickly and resist the temptation to be greedy! Think about it...over the next year or so we can optimistically envision a 10-12% gain from here, but the downside 40%+ risk is much much greater! As that guy with the "silver foot in his mouth" once said..."sometimes it's wise to be PRUDENT"!
NONE of the hundreds of stocks I've traded over the past 10 years will rebound quicker than Rambus! Their phenomenal earnings growth will be just getting started some time after the first signs or shock of a correction are witnessed! However, I'm expecting to be able to pick up more RMBS in the 30's and 20's before we really get moving! That's why I've only got 20% of my RMBS position established, and will add another 30% in the 30's and the final 50% in the twenties! Anybody with substantial holdings at an average price of over $55, should seriously think about an exit strategy soon because it is almost a certainty that we WILL have that MAJOR correction BEFORE or DURING a RMBS runup.
This BULL is definitely running scared at the moment, and if it means pulling out of the market for a year or two before a crash that could last longer than 10 years, so be it! Currently I'm trading on a very short term basis and have only one long term (1year) position...Rambus!
This market is not for amateurs nor the faint of heart...if you are new to this bandwagon since 1994 then PLEASE be advised to broaden your information base and consider VERY seriously the effects of what this kind of correction could do to your CURRENT holdings!!! Having said all that, I still believe we will see Dow 14,000 before we see 4,000, but unless we have a calm 10-20% correction THIS year I'm afraid it won't happen until 2012!
$weet Dream$
$tarpopper
PS. Sorry to pour cold water on some of you, but I think it would be VERY healthy at this time to discuss the froth in the markets now rather than later! THE SOONER WE PULL BACK FROM DOW 10,000 & NASDAQ 2,000, THE SOONER WE WILL ACHIEVE THEM FOR GOOD!!!! |
