We are saying much the same thing as last quarter. The closer we approach the Jupiter/Saturn conjunction in May 2000, the more stock valuations will approach common sense and value. It may even take until May 2000, but technology sector stock prices will come down to earth. Software companies such as Microsoft are indeed the future. But going back to the future, let us remember the story of Rockefeller Center properties. Arguably the best property in the world, it was sold to the Japanese for a premium price. Years later, the Japanese owners sold at for a MASSIVE LOSS. The same fate may await Microsoft (and many other) technology company shareholders. If the insiders keep telling you their stock is overpriced, is it rational not to listen? As financial astrologer, it makes cosmic sense for me to agree with Microsoft's President Steven Ballmer that technology stocks are overvalued.
We are preparing for the third and final Saturn (Down) Uranus (Technology)
Square May 13th. It is hard to imagine that the Nasdaq insanity will continue
past then given the major Jupiter/Saturn that month as well. Still anything
IS possible when investors are manic, but it is not the SANE way to play.
From Out perform to Market perform:
Lucent (LU)
Intel (INTL)
SCI Systems (SCI)
From Market performer to under performer
Microsoft (MSFT)
Previously we recommended buying Motorola (MOT), Hewlett Packard
(HWP) and the 2000 Portfolio Stars IBM and Sony (SNE). But all are
now too rich and we now have sold or are writing covered calls on them
and have downgraded them to "market performs".
On Wall Street, the pendulum of investor sentiment historically swings from greed to fear and back again. These days, instead of being measured in months and years, the swings are measured in days and weeks. Greed, stupidity and insanity continues to rule the day for internet stocks.
Our basic forecast: Bubble or "Internet" plays can expect at least 68% correction from 1999 highs as they are truly the junk bonds of the 1990's. Having appreciated 5 to 10 times in 1998 and 1999, it is logical to assume the possibility of a correction. Between now and May's final pass of Saturn square Uranus, is the RING PASS NOT.
When do we changing our tune and become buyers? When there is Value to be found. So that means some day between Today and 2008! :) We are looking at four Internet stocks we look to BUY on weakness. These are:
Divide Technology companies into 3 categories:
1: The Best- Buy these near 52 week lows
e.g HWP, MOT, SUNW and IBM.
2. The Good- Buy near or below 104 week
lows e.g. Compaq (CPQ), Intuit (INTU) and Baan (BAANF) and
3. The Rest- Buy near 90% correction from 52 week
highs.
In no case, buy for much higher than business valuation if investing
for the long term. You can find a value pricing model at the Morningstar
web site.
Corel (CORL)
Intuit (INTU),
Oracle, (ORCL)
From MUCH lower prices, we plan to eventually to add to our six
core Technology holdings. These technology favorites are recommended for
gradual accumulation AFTER the Fall, or if your mandate MUST invest:
Hewlett Packard (HWP)
Lucent (LU)
Motorola (MOT)
International Business Machines (IBM)
Sun (SUNW)
Sony (SNE)
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