OTOTOT!
Stitch,
My take is the cooling off period is over and we're going up, up and away the next few weeks/months. Visits to the downside will be like trips to the Caribbean - short and sweet and a chance to pick up some shiny geegaws. The isn't much to stop the bond going lower till around February/March atleast and Greenspan will follow like Mary's lamb (into the stew? for some reason all my critters end up in stews). The extent of dollar weakness will determine if we see some commodity inflation perk up on the distant horizon. I think we can take a little more of a rise in the employment cost index in the meanwhile. I'm guessing a 4.6% on the bond (+/- 10 bps) come March. I think the IMF will continue to be irrelevant to world demand and will continue to come into play as an insurer of last resort to the wild and the reckless on Wall Street. I suspect Mahathir Mohammed will turn out to be the only one who imposed capital controls. Cap controls elsewhere are not in Wall Street's short term interest and that means the IMF boffins will find reasons to backtrack on cap controls in any form that will actually do any good to anyone. Expect gestures and posturing. Hopefully, emerging governments will take it upon themselves to act independent of the IMF. A simple 10-15% tax penalty will do just fine. Like you, I'm focused on near-term trading vehicles for now. But with an eye on the longer term in some cases. We should know as we hit new highs if the highs are coming on the back of real demand, or cheap money, hopes and a prayer.
Our interests overlap in the semi-equipment area. My picks are KLIC and PRIA. I chose PRIA as an alternative to picking up more KLIC, which may or may not payoff as well as the last two cycles given uncertainty over the impending move to flip chip. I guess you can pretty much catch a similar dollar or percentage move by some careful dart-throwing in this sector. Lots of good stories. I personally don't care for AMAT - bad balance sheet relatively speaking. Same issues as the rest of sector, much higher/worse ratios - why? Dunno. Also, tech cyclicals with debt is not fun.
Don't like semiconductors. Most of them are commodities pretending to be cyclical stocks. By the time you figure that out you're a lot poorer and wondering why the hell you're not trading pork bellies and corn as well. Or, instead. Maybe I'll trade them again when they list on the CME? Intel is not what it used to be with cheap chips snapping at its heels. The other high margin markets are pretty fragmented? No "must have" stories?
I'm lukewarm about the box makers. No compelling story there. I like the networkers, especially Cisco and, lately, Lucent. I'm guessing Nortel will be the poor third cousin soon enough. Between CSCO and LU, I think it's too early to make definitive calls on either, so why not bet on both? LHSPF (aha! the SEG connection) has been my best pick ever. I've added AOL and Medtronics (thanks WE) to my watch list. I like compelling stories that are being told by master storytellers. If not masters, then persistent and dogged at the very least. I thought, earlier this year, that VocalTec would fly. There you have a story where the hero's stuck in the mud and the author's got writer's block. Oh well, into every life some rain must fall. I've been trading BOBJY for a few weeks now. It's turned out nice, except lately it's getting cold feet about growing up and getting out of its teens. I will switch to more active trading of the semi-equipments some time later this month. Accumulating a bit now.
I prefer trading stocks (or indices) trending up with good, clear stories that I can understand.
SEG started out as a good story for me, albeit not for trading. I figured if they're in a cyclical business with all these extras plumping up the balance sheet - great! They can use the extra cash to become the 800 pound gorilla that scares the others from coming in on a whim and building DD factories everywhere, and that makes everything a tad less cyclical. Now, I'm not so sure. It's one thing to have a direct claim on earnings, and another to have an indirect claim which you can only leverage. For now I'm ambivalent - I'm willing to wait a quarter. I'm not interested in another pure cyclical.
mano |
