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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: David Howe who wrote (79211)	6/25/2001 7:33:09 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

David, I am not so sure, here are some comments from the last top on June 8th: #reply-15914081 "This is going to lead to an absolutely amazing next week..big gains on the Nasdaq, imho.", in response to Bobby warning of turbulence ahead. Four days later, NV, like a man, admits his then too bullish stance in #reply-15929304. Similarly, on May 22nd, the prior high, in #reply-15835402 "It explains why the market has to go up on even a glimmer of hope in the tech sector." or few posts later the same peak day in #reply-15836388 "BTW--I am going to wait til it gets close before lightening up a bit. Might actually sell some of my aggressive positions at Naz 2500 but remain long techs but with less risk. " NV has been bullish essentially since he came to the thread (early May?), in essence after the bulk of the move from 1600 was already under the belt. Zeev

To: David Howe who wrote (79211)	6/25/2001 10:07:49 PM
From: t2	Read Replies (1) \| Respond to of 99985

Read this story below by Tom Kurlak, the ex-Merrill Lynch semiconductor analyst. Commentary on analysts as well as their timing of calls. I recall him as a bit of a bear on Intel. IMHO, The Intel types are probably going to lead the market higher, IMHO....I cannot see Intel below 30 in July...35 is my target. I expect it to be the tech leader into July. (just have to possibly endure another week of sideways action...I am considering it a buying opportunity for my favorite candidates for a bounce) ---- Kurlak has interesting comments on guidance by management and a shot taken at Merrill Lynch semiconductor analyst in the last paragraph for upgrading lesser known names (today) and avoiding the big caps. thestreet.com Tech Bears Pile On Too Late By Thomas Kurlak Special to TheStreet.com 6/25/01 1:01 PM ET Everyone seems to be attacking tech analysts these days. Having been one for 28 years, I shouldn't add to the blame game. But, sorry to say, criticism is due -- not for the cheerleading during the bubble, but for the growing negativity after the damage was done. The tech bears are piling on now that the facts about the downturn are visible for all to see. And tech managements are falling all over themselves to describe how bad it is and how they see no recovery in sight. Don't analysts remember from past cycles that management's opinions about the business outlook are always a lagging indicator? Where's the Good Guidance? I see analysts again using management "guidance" to provide support for less-than-helpful analytical advice to investors. What tech investors need, but haven't been getting, is advice to sell when conditions are unsustainably good and to buy when they are unsustainably bad. For example, how helpful will a sell recommendation on Intel (INTC:Nasdaq - news - commentary) be 18 months from now when its stock is up 30% or 40%, especially now that it's down by nearly two-thirds from its high? Clearly, there will be ups and downs along the way to the eventual recovery. But the Federal Reserve is pouring money into the economy, which, like a large ship, takes time to change course. Money-supply growth of 12% will drive a recovery, and some of that money first flows into stocks before the real economy starts to absorb it. As for the semiconductor sector, let's not let little companies like Transmeta (TMTA:Nasdaq - news - commentary) call the tune. Keep in mind that chips are the nuts and bolts of the technology economy. While much attention is rightly focused on rebuilding America's infrastructure -- roads, bridges, tunnels, military defenses, power supplies, natural resources and all of the other neglected areas of the basic economy -- the technology foundation of U.S. economic growth is so ingrained that it has to recover with any generalized pickup in business activity. Building a Valuation Case A classic engineering and construction stock that is way up, Jacobs Engineering (JEC:NYSE - news - commentary), sells at the same earnings multiple as Intel, using my estimate of normalized earnings for Intel of $1.15 per share. That estimate is based on what sales would have been in 2001 if end markets were buying chips at the rate they are consuming them instead of digging into inventories. Which stock would you rather pay 23 times for? Jacobs is well into a multiyear up cycle and may be close to a peak. Intel is in the bottom of a down cycle and is getting close to an upturn as businesses start to replace PCs bought ahead of Y2K. And new software is here from Microsoft. Chips will remain a fundamental building block in the American economy. How much longer can inventory depletion go on? The answer is what separates the semiconductor bulls from the bears. Common sense and history say the time span isn't much longer. Before a recovery, is the downside risk in the stocks that large? Probably no more than testing the March lows, which seems to be what is happening now. So what's an analyst to do? Forget what managements are saying, look into the future and visualize a return to normalcy. Most of the time, economic conditions are normal. Most of the time, stocks have an upward bias. Most investors, over the long term, regret what they sell. While the collapse of the tech bubble makes that hard to remember, now is not the time to close the barn door. Look to buy real tech companies with managements that have stood the test of time by adapting to change. One leading brokerage house suggests dumping these older leaders and going with newer, unproven players in new niches. It's not the time for that. When the good times return, investors will have plenty of time to look those ponies over. Now is the time for pedigree and lineage. -------------------------------------------------------------------------------- Tom Kurlak is the former semiconductor industry analyst for Merrill Lynch, now retired. For 19 consecutive years, Kurlak was on the Institutional Investor All-Star Team until his departure for Tiger Management in February 1999. At time of publication, Kurlak was long Intel, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Although he cannot answer questions about individual securities, Kurlak appreciates your feedback.