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Some random notes...

When the NAS was at 5100 the trend was up, many thought the market overbought, I stayed pat, even though I couldn't believe how high it got.

Now the NAS is at 2700 or so, and many (not all) think the market oversold. I'm staying fully invested - I can't believe how low it got.

Earnings, in the long run, drive prices. In the short and intermediate term, so does FUD and PE multiple expansion and contractions. Perhaps we'll look back and see that the April crash was a bubble bursting, but since then the market was forecasting the current economic slowdown. I think so.

Well, guess what? The economic bottom is forming or will be forming between now and June, and then, given the inherent strengths underlying our economy, respectable growth will resume. When will the market recongnize and price for this? Perhaps 6 months or so before it happens, or about now.

Catalysts: There is NO optic slowdown, it's FUD. Q4 earnings will support that. The FED will go to a neutral bias - just listened to Alan and he all but said it. Gore lost, it's now a matter of fighting to the bitter end (12/11), or maintaining some class and today or tomorrow saying "In truth, we have a slim chance in the FLA Supreme court, and according to our lawyers a better chance in Seminole County. I don't want to win by having military ballets thrown out that I belive reflected the will of the voters, and so I concede before that decision is known to uphold the principle that I so strongly believe in."

Now is the time to separate yourself from the crowd, take stock, understand your equities, and play the game accordingly.

S-Cat
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<<There is NO optic slowdown, it's FUD>>

S-Cat,

I'm playing the game the same way you are, but I'm a llittle more cautious.

FUD stands for FEAR, UNCERTAINTY, and DOUBT.

How do you know that the fear, uncertainty, and doubt surrounding the optics sector is unfounded? Long term we know the products will be in demand, but nobody knows how the cyclical economics of the market will play out.

I think to downplay it all as "FUD" and therefore not worth listening to is a dangerous game and suggests to me that the market has a lot more downside... obviously there are lots of investors out there who haven't learned their lesson yet. Even the new economy can experience downturns.

Rt.
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FUD stands for FEAR, UNCERTAINTY, and DOUBT.

How do you know that the fear, uncertainty, and doubt surrounding the optics sector is unfounded? Long term we know the products will be in demand, but nobody knows how the cyclical economics of the market will play out.

I think to downplay it all as "FUD" and therefore not worth listening to is a dangerous game and suggests to me that the market has a lot more downside... obviously there are lots of investors out there who haven't learned their lesson yet. Even the new economy can experience downturns.

Rt.


Yes, yes, and yes. It is my evaluation that it is FUD, that when Nortel's earnings brought the sector down it was FUD (their optical earnings are still in hypergrowth and are forecasted to remain the same); in scanning the news, in my estimation it is true that telecomm spending may slow, but not the portion related to the optical build out - I buy into the notion that they need to pay to play. Obviously, someone discerning a different truth will make different investment decisions.

I don't buy the whole new economy thing - it's the same economy with emerging new leaders which creates uncertainty and volatility in the short term.

The notion that it is dangerous to try to catch a falling knife certainly has some wisdom to it, I think the knife has fallen, made an indelible impression, is currently still "twanging" back and forth in the ground, and will soon (today, tomorrow, January) rust away and not be the clear and present danger it has been. In my estimation, now is not the time to be playing shorts (something which I admittedly am not good at), but to be establishing your new long positions for the continuation of the Broadband build out, which has just barely scratched the surface. Part of my thought in my original post is that the market has been forecasting the current economic slowdown which will bottom now or in the early part of next year, so now would be the time to be invested as the market will start forecasting the eventual economic pickup to respectable growth.

S-Cat
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S-Cat writes:
In my estimation, now is not the time to be playing shorts (something which I admittedly am not good at), but to be establishing your new long positions for the continuation of the Broadband build out, which has just barely scratched the surface. Part of my thought in my original post is that the market has been forecasting the current economic slowdown which will bottom now or in the early part of next year, so now would be the time to be invested as the market will start forecasting the eventual economic pickup to respectable growth.

Correct-imundo, Cat! I do not know whether Nasdaq has bottomed, and I expect some, if not all, of the gaps today's trading leaves to be filled soon. However, the big picture has changed significantly for the better. The most powerful man in the world told us today that the Fed gets it!. They know that 50 basis points in the last hike was too much, and they will cut rates quickly if needed to prevent recession. Failure of the Fed to recognize their mistake of over-tightening was the only real danger that our economy could be dragged into recession. Today Sir Alan told us that he understands the risk and will correct the mistake promptly if the slowdown accelerates. Oil price is poised to break below $30, and that ain't bad either (although not nearly as significant as Greenspan's speech).

I'm not saying we will be at 5000 again anytime soon, but you are right on in saying that the fundamental strengths of our economy will reassert themselves in 2001. The macro forces of globalization, deregulation, and spectacular productivity improvements wrought by technology investments have not been changed, and the business cost reductions from exploitation of the Internet are just beginning.

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Now is the time to separate yourself from the crowd, take stock, understand your equities, and play the game accordingly.

ummmmmm- Very nice quote. I don't have a printer, so I can't print it out and tack it on my wall. Instead I used my trusty paw and scribbled it on a green piece of paper. I am finding that rational thoughts and studying companies in which I own shares has a calming effect whilst being (almost) fully invested during this tech bear market. Certainly gives a better perspective than looking at all the red in one's portfolio.

Thanks for the rational thought.
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Certainly gives a better perspective than looking at all the red in one's portfolio.

Yes. I like green. I like yellow if in the "high" column on Datek's streamer. The two together I like best of all.

S-Cat
S as in Smiling,HopefullyForMoreThanOneDay
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What we know so far is that: Greenie said he does not want a hard landing and will probably go neutral bias this month. Florida election issue is all but over.

So the NASDAG reacted by over 1.2 billion volume before noon with 1 billion being buyers. The Dow the same, and the S&P the same.

Is this just short covering or is this institutions now buying?

Big movers for today in Optics, Storage and B2B, same as every relief rally. SDLI, BRCD, EMLX, PMCS, JNPR, VRTS, CIEN, ITWO, NTAP Their charts don't look that great though, all of these been in a downtrend and still triple digit PE's. Just a few small and micro caps picking up some action.

Wish I had caught the 100% move in NAVI the last three days. But hey?

Let's see what's really going on here today before we get too excited. I am as anxious as anybody to recover from the massacre my port has taken. Can't afford to give any more to Mr Market though.

Be careful out there.
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I agree with TM and Rat. The bottom is yet to come. As for those who think that the world wide expansion of the web is coming soon (and there the profits to the backbone builders), I have pasted an outline of a 26 page study on the SE Asian economy. Yes, I know it is far away and only a small part of the TREMENDOUS GROWTH POTENTIAL, but everything is related. Take a quick look before you think the Chinese are going to make QCOM et al zillions of dollars:

Special Report: Southeast Asia's Financial Situation - Is there another Economic Meltdown coming?

Executive Summary

1. Assessment: Bad loans in the banking sector are the biggest threat to Southeast Asia's slow recovery from the economic downturn of 1997. Precarious banks that previously flourished during nepotistic regimes, such as in Indonesia and the Philippines, are floundering because of bad bank loans to businesses owned by cronies of past administrations that are failing now due to post-dictatorial economic reforms. Reformers are attempting to restructure the banking industry, bringing its business practices aboveboard and introducing competitive forces; however, in the meantime, governments are expending vast unsustainable sums of money to prop up their banking sectors, creating a huge drain on their economies and making it more difficult to service foreign debt. Given entrenched oligarchic resistance to these economic reforms, banks with poor performing loans will be the millstone around the neck of Southeast Asia's economies. Contrary to the claims of "recovery" all the indications are that Southeast Asia's debt-burdened countries face a deepening economic and political crisis while enduring constant international pressure for corporate and financial restructuring amid stock market and currency turmoil.

2. Background: While recent large falls in Asian stock markets have been attributed to rising oil prices and declines on Wall Street, some analysts are pointing to more fundamental problems that could see a repeat of the 1997-1998 Asian financial crisis. A recent article in the Australian Financial Review, questioned optimistic predictions for economic growth by the World Bank and the Asia Development Bank and warned that the Asian economic "recovery" remains very fragile. "In circumstances eerily similar to those played out in mid-1997," it said, "Southeast Asia is once again emerging as the weak link in the region's economic chain."

3. Discussion: The 'Asian Meltdown' economic recovery is running out of steam. During the past year (Nov 99 - Nov 00), the Philippine stock market lost nearly 29 percent of its value; Thai and Indonesian stock markets lost over 25 percent of their values; and Singapore's stock market lost over 11 percent of its value. Non-Performing Loans (NPLs) of the Philippine National Bank are at 33 percent, while Thai banks are reporting NPLs at 18-21 percent, and in Indonesia the government says it will spend $10 billion re-capitalizing its insolvent Central Bank. Southeast Asian economies with the highest foreign debt (fd) to Gross Domestic Product (GDP) ratios are having the most difficulty recovering from the 1997 economic meltdown. The top Southeast Asian debtor nations are Indonesia (19% fd/GNP), Thailand (17%), the Philippines (17%), Vietnam (15%) and Malaysia (10%).

Disclaimer
Edited by the VIC Staff from the following resources. Views expressed are the opinions of various authors gathered from open sources, and do not necessarily reflect the official opinion of Headquarters United States Pacific Command.
Please forward any comments/suggestions related to this article/handbook/primer to the VIC Staff

Like I said, the full study is 26 pages of supporting references (I will email it to anyone who wants it). While it does not mention Japan, Korea or China, you can do your own DD and come up with the impact that another meltdown will have. Be careful out there...

PS The study was written by a non-economist Naval Reservist. See, we do have some smart one out there!
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Let's see what's really going on here today before we get too excited. I am as anxious as anybody to recover from the massacre my port has taken.
Agreed.

Can't afford to give any more to Mr Market though.
ditto

Be careful out there.
Yep. I just liked S-Cat's quote and happened to find a blank green piece of paper on which to write it - believe me, it will be a looong time before I'm making fast moves with green pieces of paper printed with president's faces!
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