Don, the reason I believe it is the following reason.
I do believe in contrarianism and the gloomier they make it look
the better it is for a quicker recovery in techs. Besides this is the first time that across the boards the PE's are all low. Yes we might go lower still and probably will. I say another 20% is possible.
About the basing period, AMAT KLIC and other stocks that rallied well last year will start first. And they will be the ones going up fast at the end of the year. Followed closely by AFLX, SFLX and JBIL.
Then maybe 6months to a year later FSII and the others. I think that's why it is a three year cycle. It takes a while for all of the techs to be soaring and going full throttle.
Techs don't start and stop in unison and that's what makes it so hard to feel for the timing, but thinking back to the end of the last cycle, the end came in different groups at different times. And in between we saw many companies rally.
I think that's where years put in looking at the market gives experience that the fundamentals can't help with. I've been out of synch with the market from day one it seems. The time that I made any really good money was when I got in synch just a few months before the end in techs. I have been fighting the trend ever since.
As long as the interest rates stay low, the market is going to be over all bullish. The money has to rotate, and it always does from sector to sector. So there is a group mentality to the street, and tapping into that herd mentality is the key. I think minds were made up at the end of last year that the end of 1998 was going to be the time to rotate into techs. Like I said it won't be all techs at once. It will come in waves over the next three years.
AMAT and KLIC should be in the first wave followed closely by AFLX, unfortunately FSII won't be really active for another year out. It won't stay flat though. It will probably go into a trading range before the rally for it starts.
With your wonderful data we should be abe to plot out the sequence of which companies will do well in rough order grouping them into threes.
It would be neat if we could go back to the last 3 year rally also. 1992 to 1995 and see who did what when.
I think by investing in the first wave stocks, then using profits to buy into the second wave stocks and the same when the time comes into the thrid wave companies, one could really increase the profits possible and also build up a good diverse portfolio.
I have never shorted, but Marty Zwieg says there is nothing wrong with it and that it should be a tool used by investors. The next 1995 to 1998 like period shorting should be in our tool bag. I've been long this whole period only to see no profits and being in the hole.
Our optimism for technology is correct, but we have to face the reality that the market doesn't have the patience we have shown. |
