To: michael97123 who wrote (50766 ) 8/18/2001 10:07:55 AM From: Zeev Hed Read Replies (2) | Respond to I don't think that .5% is necessary, it is more important for the markets to see that we are still in a "fed relaxing" mood than fed "tightening" mood. As far as the economy, there will be no difference if the feds lower by half now, or by two .25% steps now and in six weeks. The second option, IMHO, is preferred, since it spreads the time window of relaxation, and keeps this part of the market equation on the bull's side. A some point, the markets are going to start and worry (needlessly?) that the combination of both fiscal and monetary stimulus might be "too much" and will cause the feds to tighten sometime next year. Personally, I think that we have no more than another 6 to 8 weeks of this torture and starting deployment in the sector during the next 8 weeks might be judicious. Just remember that the last leg down in a bear phase is often the most murderous, thus I would prefer (if deploying early, pre a major bottom) those stocks that on a valuation basis are stronger, for instance NEWP just printed a new two years low here at $17, which is only some $3.5 above book value, buying in the range of $15 to $17, if we get there, might be rewarding. Similarly, DPMI here just above $30 looks appetizing as well, it could print a new low as well, so the high $20' should be a good entry point. I also like CYMI when it gets back to the $18/$21 area if it gets there again (which I still expect). What I will not expect, however, is a return on the next upcycle to the highs of the last cycle. For instance, right now my model for the top on AMAT on the next upcycle is only $75, well below the $115 high of last year.
