john you have a good memory. Dell, csco, msft, emc were my favorite stocks. One that you almost couldn't lose money on. I blew my dell calls badly. I was up huge but I hung on too long and you know what happened to dell. I think dell will hang out where it is now for quite a while 30-50, no higher, probably no lower. csco, like the previous post points out, is now considered an internut play so perhaps valuations are now meaningless. Who looks at the p/e of csco these days. When I wrote that, I probably hadn't looked at it myself. I am kind of shocked to see that its p/e is twice as high as it's ever been before. I can't see csco going higher from here, only downside, though conceivably it might just hang where it is for a while. I don't think dell or csco will beat expectations by very much, maybe a cent or two or three, nothing big. Incidentally I don't buy the csco buying other companies explanation for its high p/e. They've been steadily buying other companies forever.
As for msft, its the one hi-flyer that hasn't gone berserk in terms of its p/e. So mr. softie will hold up better than the rest IMO. But I don't see much upside for it either, maybe 100 or so. Incidentally, as I type this msft is at 80 and if it closes below 80 I may go into panic mode. I don't own any msft right now, but its the key tech stock no question. If it can't hold 80 then why will emc be able to hold 100? With earnings season basically over like a lot of other people I expect some type of correction. We really haven't corrected since last October. Looking at the historical p/e charts it's clear that we entered a new phase of the market in October, probably due to Greenspan's two big cuts in rates. I can only characterize the past six months as a bubble. No one knows how long it can go on, it could be years or it could be next week. The internet stocks have never corrected except for very very briefly. At some point I think earnings will be relevant. When? My best guess is the year 2000. Maybe that we be the true y2k problem for the market ;). I'll also admit that I haven't played the internet stocks at all properly. I've been largely burnt on them. The only ones that I like are aol, yhoo, and maybe exds. The rest look like tulips to me. amzn at 10 times the market cap of bks, unbelievable. Will amzn ever make any money? Will it ever matter? When/if the tulip stocks correct they will seriously pressure the p/e's of emc, dell, msft, csco. Which in turn will pressure the overall market. As I said before, we've priced in all the good news and the next couple of years earnings on a lot of stocks, except the cyclicals and small caps. But now the cyclicals maybe are priced in as well. So maybe the thing to do is find a cheap good small cap and hold on for its turn, or find an out of favor sector like software with reasonable p/e. As I said, orcl has a p/e of 30. 2 or 3 weeks ago looks like the bottom for software and I wish I had grabbed some kea, orcl, cpwr, chrz. They have already had their correction. Wish I could say that about the rest of this insane market. You don't sound scared and either is just about everyone else I know, who have gotten rich without me on aol and all those internets. Last year I did great on the hi-flyers but this year I seem to have lost my touch, so maybe I'm just bitter. Still I know in the past it usually wasn't this easy to get this rich this quickly just by buying and hanging on. I know so many people who have made six figure profits just since Oct just by buying aol et al. We will see if this time it is different and the market doesn't "punish" them like it usually has in the past for not selling when they had tremendous profits.
Incidentally despite the doom and gloom I still doubt we will have any kind of long term bear market. Just another 10-20% correction. And msft, emc, csco, and dell will certainly be much higher 5 years from now. It's just the next year or two that makes me doubtful.
And while I have been rambling emc has staged a nice recovery from below 105. I think the key to playing the hi-tech's like dell and emc is selling covered calls on them at the right time. The option premiums on them are unreasonable considering that they will not perform in 99 as they have in 98 and before. Eventually the premiums will come down but until that happens you can make a nice profit selling covered calls. In fact, I expect to make more that way than thru stock market appreciation. I used to buy calls but now I think the game is to sell calls. We will see... |
