zurdo, another post from Viking from the Yahoo MRK board (Thanks Viking, if you happen to read this):
Not to beat a dead horse here, but the pharmas are following the
script. As I outlined earlier, general market conditions rule here. Lets
look at today's action:
PFE
Positive news: Howmedica sale. Ordinarily, PFE should have
climbed on the news, aquirer sunk. Well, the aquirer sank, but so did
PFE. Positive news failed to push it up. Why? Yes, to some degree it
was already anticipated. Yes, north of $2B would have been better,
but really... the market just doesn't care about the fundamentals here,
it's the p/e, profit-taking etc. Again, WLA moves in sympathy (high
p/e). We know it's not fundamentals anyway... it's up intra-day,
closes down.
MRK
Institutional money supports it (MRK, a dow component). As a fund
manager, you'll look at it's p/e, see that all the current noise is
POSITIVE, it's a dow component. You must put your cash
somewhere. Pharmas? Well, MRK looks good. He's not thinking
2-5 years, he's concerned over the next couple of quarters. MRK by
percentage has more institutional money than individual money as
compared to PFE. Surprise, surprise, all that POSITIVE noise in the
air, and we get... an upgrade! Another reason to buy, as they see it.
Price up.
Bottom line: PFE will languish. IT WILL RUN UP on 3Q earnings.
Then the market tanks in the fall, and OF COURSE, PFE will follow.
PFE will continue to be cheap. What does that mean? It means all
positive news will be ignored by the market, but will keep adding to
PFE's future value. The sale of Howmedica is not simply some cash
(though that's nice too), but it means you got rid of a low margin part
of your business (ergo... EPS climbs). This sets PFE up for a huge
run, once the market wakes up. The fact that PFE is cheap now, I
bless, for as money comes in, I keep buying, waiting for dips. And
MRK? The opposite. It'll do not so bad if their price DOESN'T rise.
If it goes up, it's time to short. Longer term, it will at best muddle on,
rather than explode like PFE. For long term return on investment, my
money is in PFE. Today, was a nice illustration of the truism: the
market conditions, not company fundamentals are in charge here.
Regards,
Viking
P.S. The market is so technically oversold, that I demand it rally
soon. It must rally in order to set up an even bigger dive in the fall.
Many need a rally to get out of uncomfortable positions/trades. So,
lets have a rally soon, lots of folks need it<g>.
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