Tuesday, July 17, 2007

Don't Believe the Hype...... Its a Sequel !

This is directed at all the this time its different crowd out there. The same ones who rationalise away all the underlying rot that is so clearly evident. An acquaintance (and this in no dummy for sure) was apprising me of the wholesomeness of this current advance due to the 'old school' names leading the way such as IBM and Caterpillar to name a few. He explained to me how the tech bubble was based on pipe dreams and this is based on companies who make something and have revenues. I listened intently as he conveniently told me there was nothing to worry about sub prime because Hank Paulsen and Ben Bernanke and even today Merrill's CFO said that sub prime is contained. (Add Merrills' CFO to that list as of today).

Wow, am I relieved. WTF was I worrying about. That these 2 pimps have given the all clear sign to investors everywhere, I should be beating a path to the local loan shark to bet my life on this market. It got to the point where I began to wonder if he was convincing himself or me of the merits of this market. I have learned through experience to bite my tongue as I have been through all of this before via the tech bubble so to say I am a battle hardened at dealing with the cocktail party market strategist would be an understatement. It lead me to the title of today's post, don't believe the hype.....its a sequel. (with credit to Public Enemy).

It truly is a sequel and I wanted to take this opportunity to send this out to all those who went through the should have, would have could have, post mortem after the tech bubble. To the same people who told me at parties why stock splits were bullish for their shares and why in the new economy standards like P/E's didn't matter. To the same folks who still own the shares since late only 8 years since the bubble was popped but their investors so that is no time at all.(all prices split adjusted)

Intel at $55 which currently stands at $26.33
Nortel at $700 which currently stands at $24.33
Microsoft at $45 which currently stands at $30.77
Sun Micro at $60 which currently stands at $5.29
Cisco at $70 which currently stands at $29.73
Dell at $50 which currently stands at $29.19

So to all those who said I wish I would have sold. If, and that's a big if, you are still involved in the markets and have positions that are evoking the same type of feelings of invincibility, names like Jim Cramer's 4 horsemen Apple, Google, Baidu, and Research in Motion. Please protect yourself. There I have done my civic duty. Remember that Gordon Gekko said a fool and his money are soon parted, assuming they are lucky enough to get together in the first place and Sir John Templeton said that "this time is different" are the 4 most expensive words ever uttered in the history of the markets. Good luck and good trading.

1 comment:

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