David, I guess I'm somewhat "reformed" as well on the Kurlak issue in the sense that I wouldn't be as willing to fight the Merrill Lynch salesforce this time around and I can admit the guy does get it right and yeah, even I went long on one of the ML stocks when the LSI upgrade hit.
But this cult of personality surrounding Tom Kurlak is just w-a-a-a-y over the top.
I've yet to see any reporters actually zero in on the fact that while he did correctly turn in mid-August of 1997, he turned after issuing a research note that in hindsight is about as ass-backwards as you can get.
For example, I was looking over an old Kurlak research note dated 8-6-97 entitled "Semiconductor Industry" and came across the following (my emphais added):
"...industry sales and order rates should begin to show the 25%-35% increases typical of cycle peaks by early to mid-1998...we should expect consensus earnings estimates for semiconductor stocks to reach high levels at that time...we expect conditions to develop that could lead to a cycle top for the stocks during 1998..."
To me, as far as that specific piece of research goes--a sector-wide reassessment that called for a cycle top in 1998--I'd argue that an intellectually honest assessment of that research note would come to the conclusion that far from getting it right, he got it fairly backwards. If you look over the $SOX, you will find that far from the top occurring in 1998, the top actually occured within days of Kurlak's own report, driven in large part by the fact that he turned on MU 1 week later and INTC and TXN 2 1/2 weeks later. I guess the cult of personality would attempt to argue that "my god, Tom Kurlak has such a high level of integrity that he wasn't afraid to cut the stocks despite what he wrote only weeks before".
And that really doesn't cut it for me. It wasn't the fact that Kurlak reached "the turn in the road", it's that he did so right after issuing a report that saw "the best of all hoped for scenarios" developing for chips stocks. It's difficult for me to see how a "best scenario" would include Asian stormclouds rolling up over the horizon.
Now in mid-1998 instead of being at a cycle top Kurlak himself is apparently hinting at the possibility that we are in a trough and should consider buying.
How much more ass-backwards can you get than the group hitting its peak days after you issue that report and then later coming out roughly at the point you forecast things would be peaking, but now instead of peaking they're in a trough and you're hinting that people should be consider buying?
Kurlak can be right. But there are times when you really have to throw the flag and say "time out people."
Cramer likes to bust on the TK critics because he probably gets a lot of e-mail that really is way out of line. He's on SI (watch it!) so I wouldn't be surprised if he has read some of the postings. If he reads this one, I'm sure parts of it will look familiar.
IMHO, if someone wants to get great insights on trading and market dynamics, Cramer's the man and TSC is a great publication that's getting better. If one wants to get an unemotional, unbiased and complete look at the record and methodology of Tom Kurlak - forget it. He's the high priest of the Tom Kurlak personality cult <g>
I just don't whether or not the people out there who may buy some chip stocks on expectations of a TK turn (if it hasn't already started) will be disappointed when they see which one's he's going to turn on first. Is is going to be every stock in his coverage? Or maybe an analog player, a PLD player...I don't know.
For the amount importance the financial media places on Kurlak, their coverage of him has been ridiculously poor. CNBC made a big deal about his alleged "INTC could go to 60" call back on April 15th. Now, the funny thing about that call is that Fortune ran a piece in early February in which Kurlak was reported to be looking for INTC in the mid-60's. So, fast forward 2 1/2 months later, and you get some idiot off-camera editor allowing a story to be presented as "breaking news" when one could infer that if Kurlak said anything that day it was probably just a reiteration of his previous comments.
Good trading,
Tom |
