>>Once the internet stocks come back to earth, and they will, everyone gets hammered.
You comments are valid; at some point there will be a correction to the current exuberance. The choices seem to be:
1. Take profits now, and wait for the correction <FEAR>
2. Stay fully invested and ride with the trend <GREED>
3. Reduce portfolio volatility by moving a higher percentage into cash/bonds <FENCE WALKING>
The analysts have been recommending #1 for the last 3 years. If I had listened to them, my portfolio would be 1/3 of today's value. #2 is risky since there is definitely potential of correction at these levels, but I'm not sure it makes sense to walk away from this period of unparalleled momentum. From all the analysis I've seen, liquidity rather than earnings growth is driving this surge, and I don't think the cash inrush from 401Ks, foreign investors, etc. will dry up in the near term. #3 might make sense; take some profits off the table and wait for a good moment like last October to reinvest.
Short term, I feel we'll continue to see growth. 4Q growth for the techs and I'nuts will be magnificent and will spark more buying frenzy. Intc's report due 1/12 will be the bellweather for the sector, and I expect great reports later on from msft, csco, and dell. Maybe it would be prudent to take some chips off the table at the end of the quarter, or, if you're in great stocks, sell covered calls to generate income.
IMHO, comparing the Internet to tulip bulbs or inflated Japanese real estate is not valid. The Internet is a valuable productivity tool, and ecommerce is here now and exploding.
49er Faithful Frank |
