Kent,
Thanks for your reference to the article in the Wall Street Digest. I went all the way through it including his prediction # 8. This is one prediction we would all like to see come true, but while it may happen by the end of the year, it seems very optimistic to me. Presently, there is a tremendous amount of damage being done to the semiconductor industry in terms of falling stock prices. As of Friday, semiconductor stocks are still in a "free fall".
I looked at the SOX--X, Philadelphia Semiconductor Index, to establish a "fix" on the present situation. On Friday, 6/12, SOX closed at 235.62. On 5/14, SOX closed at 307.17. In less than 1 month the SOX is down 23 percent. If anything, the losses in the last few days have been steeper than at the beginning of the period. The last time SOX closed below Friday's close was 11/26/96, 18 months ago, at 233.53. What is going to happen in the near future, I don't pretend to know, but a lot of damage has been done and more may be in the offing.
Even assuming the SOX stabilizes in the near future, a "basing" period usually is required to establish a baseline from which a rally can be mounted. This baseline usually lasts for an appreciable period of time. Can this all happen in the next 6 months? I am doubtful considering the fact that the last week has seen Japan, the worlds #2 economy, tumble into recession. It's not obvious that Japan has figured out what to do about their situation. Until they do, the rest of Asia isn't going to recover - it could easily get worse before it gets better.
As I have said before, I first bought FSII at 13 in June of 96, slightly over 2 years ago. It closed Friday at 9.50, a paper loss for the moment of 27 percent. FSII could well sink much lower before it goes higher. Some of the stats on the stock are still much worse than other stocks which have been going down. According to DailyStocks, FSII's estimated earnings for the year closing Aug 98 is -0.20/share and closing Aug 99 is 0.55/share. That's nothing to write home to Mother about. Getting back to Wall Street Digest's prediction of a booming rally by the end of the year - I won't be holding my breath! We can compare notes on 1 Jan - I hope we are both richer by then.
Have a good day!
Don W. |
