Chris, First, the great majority of the stocks on which I have bought puts over the past 4 years are MUCH lower than they were when I bought them. If fact, MOST stocks, even tech stocks, are down since 1997. Yes, there is a sizeable minority that gets all of the attention, but I would claim that making money on tech stock puts has been like shooting fish in a barrel. Just a few names that are dead meat. Yes, some have come back a little bit, but most are still way under water from where I started buying puts. Look at the long term charts on these names: Picturetel, C-Cube,
Western Digital, ReadRite, Hutchison Tech, Autodesk, Coms, Compaq, Newbridge Networks, Shiva, MUEI, and on and on. I've had so many huge winners in the tech area that have gone down and stayed down that I can't even remember half of the names. And some of my biggest winners have been multiple dips: Presstek until it croaked, Picturetel was my ultimate multiple dip play until it finally went away completely, all the SRAM stocks, all the graphics chip stocks, MU, which you mentioned, Adobe, Rambus, Intel, Dell, etc. True, they are up now, but I made big money and am getting ready to play some of them again.
True, there are a dozen tech stocks, not counting the internuts, which have done well in this mania. They are tough nuts to crack and I haven't had much luck with MSFT, Cisco, or Lucent. However, I am absolutely convinced that these stocks will be among the biggest winners when all is tallied up.
Now, the tech bulls always mention these dozen stocks, along with the several dozen multiple dip stocks that are on a bounce currently as proof that they are real cos. Nonsense. This is great fishing ground for bears, even at the tip top of the most manic market in history. Yes, if you played the Gorilla Game perfectly and didn't detour into the hundreds of stocks that looked dominant for a little while, you are ahead of the game and deserve congratulations. However, I should mention that almost nobody did so, not even the authors of that particular strategy. That's because gorillas are easy to pick after they get toppy, not before.
That doesn't mean we can ignore other areas. After all, the Greenspan recklessness will hit many other areas and many of those stocks are way overpriced, some more overpriced than the big techies.
The catalysts for the general collapse are many, but I want to state that we don't need a general collapse of the dozen big names to make lots of money on the downside. It is nice if we get the BK, but my best year ever buying puts was in 1996, and that was a crazy up year for tech stocks. But the catalysts are everywhere: higher rates, weaker dollar, lousy eps (even in the faked reports), no growth, no demand, no margins, huge debt overload throughout the economy. So, what you are looking for is not catalysts. You are looking for the last catalytic converter that breaks the camels back, and I say we step on that hump when we get to it. <g> |
