Luc, i'm sure you'll love this one:
Boy am I getting sick of people who come on CNBC and say
that stock prices are cause for worry. Here's my take: Stock
prices are always cause for worry.
Think about it. Stock prices were absurdly high in 1984
versus the recovery then. They were ridiculously overvalued
after the Gulf War, I mean like that should have changed
anything. They overshot where they should go by a mile after
Clinton got elected, because after all he is a Democrat.
They ramped much too much last year in light of 1996
earnings.
Enough is enough is enough. Certain stocks are overvalued.
I spent the day trying to get someone to write me a put on
K-tel (KTEL:Nasdaq) so I could blast that piece of garbage
to kingdom come. Nobody will sell them to me. Some of
these faux-Internet stocks are leading-decliners-in-waiting. I
want to bet the big enchilada against some bogus bio-health
care stocks that not only have no cure for cancer, but have
turned out to be misquoted baskets of hope.
However, if I have to sit here and fret about the overall level of
the market and watch the futures rip through the market all
day, I know that I will be sidetracked by my main mission:
looking for opportunity.
Here's what I see: Asia, which I thought was done going
down, took a new leg lower this week, which has been the
safety valve for interest rates all along. Bonds, which had a
scare north of 6% -- a real cause for worry if they kept going
up to, say, 7% -- have calmed down nicely and are doing
well. The Middle East has become less of a worry with these
carrier announcements. The Cisco (CSCO:Nasdaq) quarter,
which had plenty of people spooked six weeks ago, turned
out to be FABULOUS (and yes I am long).
Look, I hate to be a defender of anything. I am a seeker of
opportunity, not a tormenter of bears. But we do not need to
evaluate the market every single minute. That makes you
nothing. As long as interest rates remain low, and
companies keep blowing out numbers the way Cisco did,
these valuations for certain parts of the market make sense
to me. Am I comfortable with them? What are they, pillows?
Warm slippers? Good-fitting flannel sheets? Heck, I don't
buy stocks out of comfort. I buy stocks out of opportunity
and risk assessment. Is the risk high? Of course. But it has
been high since October 1982, with the possible exception
of an interlude, roughly defined as October 1987 until
February 1988.
....That's why
you should look for stocks you like, not futures on stocks
that you don't like. Not SPX puts because of some interview
where the policy maker mouths the politically correct thing.
Let me leave you with one thought. Other than a few
moments when Dell (DELL:Nasdaq) got poleaxed by the
press for some bizarre currency hedging it did a few years
ago, and when a great ex-Goldman Sachs analyst was
criticized for his coverage of the stock in a bogus Heard on
the Street column, Dell has flown. In fact, THIS STOCK HAS
BEEN OUTRAGEOUSLY EXPENSIVE SINCE IT CAME
PUBLIC. Yet, it remains a large position of mine, and has
made me more money than any stock in my lifetime, save
Cisco.
Go figure. Guess I should have shorted it. Would have been
real right on the valuation -- the heck with the money I made.
NOT! |
