Carl - Thanks for your post.
AMAT has consistently bottomed at the end of the dip, not at the beginning.
This makes sense. The market cap of AMAT provides the liquiity that institutions desire. So if the big_guys decide to scale back, they probably will do so in lesser issues first. Note that some issues, such as FSII haven't dropped much the past few days. (Not that FSII survival is gauranteed)
The semi industry is hurting already, and the world's economy is healthy
The semi equip guys were hurting July of 96. I was surprised by the quick rebound and let some calls I sold take my equipment stocks out from under me. Now I can buy those same stocks for 1/2 the cost basis I held then.
The semi mfgs were in pretty good shape then, which based on share price does not appear to be the case now. I hear peeps now and then about an upsurge in chip order/shipments, but nothing in the headlines.
In general my feeling is that cash is king right now.
No argument there- though I've maintained a steady 25% allocation to stocks the past 2 years, with ever increasing diversification. Of course, I'm down some dollars too. I buy puts from time to time, but have a hard time holding them for more than a week or two.
I think the Fed will intervene with an interest rate drop or by flooding the market with liquidity when the Dow falls to the 6600 to 7000 range, and that will ignite a rally.
The drop in the DOW may be an excuse for a rate drop, but I don't a rate drop think it will directly cause a rally. A rally will occur, but I don't believe we will see the entire market participate, nor many stocks breach their 52 week highs. In a word, a _sucker_ rally. Of course, for anyone long a few shares, selling into that rally may provide some gains.
And as for whether we can now avoid a recession, contemplate how much money has vanished from the face of the earth in the last week. What will that do for world-wide spending?
If you consider that most of the paper loss occurred in mutual funds, 401k etc, then many may not be aware of the extent of the damage until end of september, mid october, when they get their quaterly report.
By then, we may be in the midst of a mini rally, where it won't look so bad. But the damage occurring in Russia and Asia will impact long term GDP growth and spending. Good points, you make. Thanks for sharing your thoughts. Shows you that you can't pick a fixed target, but must reevaluate as the situation evolves.
Once my check, which is 'in the mail', arrives at my broker, I'm buying more stocks. <g> |
