check this out...
from thestreet.com:***
We are in the "who cares" mode right now, which
is a few sessions before the "get me out at any
price" mode. As in "who cares" about that blowout
quarter for General Instrument (GIC:NYSE)? Or
"who cares" that Merck (MRK:NYSE) has
announced a giant buyback and a boost in the
dividend? Heck, who cares that GTE (GTE:NYSE)
and Bell Atlantic (BEL:NYSE) are getting
together?
I know that when the market is in this mode, it very
disconcerting. It takes people by surprise, as there
are a ton of investors who are still too upbeat. Let's
take the General Instrument situation. Tuesday
night Jeff Berkowitz, my partner, and I were
working after the close when General Instrument
reported a "blowout" number, way ahead of
consensus.
No matter how gloomy it gets, you still feel good
about getting it right, and we felt good about
General Instrument. The stock had closed at 26
and we figured it would return to its old high of 29.
As euphoric as we were, we still decided to offer
5,000 shares at 28 in Instinet, the buyer-to-seller
direct market that trades electronically.
We were taken immediately.
Hmmm, we thought. We are giving the darn thing
away. We have
genuine-upside-surprise-shorts-must-cover mode
going here. Pull the offering.
Wrong!
The next morning we were jolted back to the reality
of this market, which was that nobody cared that
GIC was great. It was if the whole market were
saying, "Heck, man, Lucent (LU:NYSE) blew the
numbers away and nobody cared, like why should I
buy the GIC?"
You are talking brutal reasoning.
And the stock closed the day unchanged. Three
weeks ago we would have been high-fiving after
seeing the stock go to 30. Instead we are sitting
there thinking, "Now what? Do we hope for a big
set-top box contract? Do we bet the market comes
to its senses?"
It gets worse. I am reading the release from one of
my small S&L holdings. Best quarter ever. Growth
prospects unbounded. Lots of cash. No bad loans.
Growth market. And what's the stock doing? It's
unch. So I call my contact and I ask him if I am
missing something. Did I read the release wrong?
Was he more cautious than the release led me to
believe?
"Not at all," was the answer. "It was a great quarter,
but no one cares."
There's that phrase again.
Later after the close, I meet someone who is angry
that I mentioned on CNBC that Peoplesoft
(PSFT:Nasdaq) is the kind of high-multiple stock
that scares me here. The stock closed down a
couple for the day. She started telling me about all
of the great things PSFT is up to, how it's
expanding and how it's now cheap, having come
down 20 points from its high.
"But no one cares," I interrupt.
"Yeah, that's it," she chimes in. "No one cares."
Okay, so what gets us out of this "no one cares"
mode? Frankly, I wish I could be upbeat about the
way we do get out of it. But I have seen the "no one
cares" mode so many times in my career that I
cannot sugarcoat it. When no one cares,
somebody blinks. Somebody says, "Hey, what am
I doing in this thing then if not for the upside
surprise, or the great quarter, or the buying
opportunity caused by a decline?"
And that somebody sells. To someone else who
thinks that someone may care, and when they
don't, that guy sells. And so on. Trading desks get
long merchandise and start choking on it. Traders
get frustrated and flip out of it. Mutual fund
managers, eager to lock in something, take profits
and stop defending their positions. Until we reach
a level where someone says, "I don't care if no one
cares right now, I know there is great value here
and I am holding." That level, by the way, is not that
close to this level. It never is.
I have rarely ever seen us enter this mode without
exiting it in fear at lower levels. I can't imagine that
this time it is different. It could happen; we are so
oversold that we get some news that shakes us
into caring at these prices. Right now. But the only
action I have ever seen that has shocked us out of
this mode to the upside is a Fed rate cut. I had
thought that a prolonged, bitter GM (GM:NYSE)
strike might lead to one. But that's not going to
happen.
So I am not holding my breath.
****** |
