iPod killers, market sentiments, MARVELL, and random thoughts
THE IPOD
I just returned from Circuit City where I looked at an assortment of iPod devices. I was interested in the Nano in particular. Not a single one of the competition came close to having the style or slim size of the iPod.
They jammed theirs with extras like voice recording and a radio. But they looked ugly. Taste is personal, but these were ugly.
And consumer electronics can't be ugly.
It can't be this hard. These manufacturers are getting it all wrong.
The solution is to make a device that allows for removeable flash and batteries. One thing that Apple misses out on is the inability to upgrade. Add that feature and you add a critical missing piece of the ease-of-use equation.
Over time the consumer has the choice of upgrading when and how much.
Naturally, this puts more power into the hands of the Flash guys and away from Apple. But it is what consumers want. At least let me pop the LiH battery out without having to pay a ridiculous amount to someone else.
It would make a lot of sense especially in a cell phone MP3 player.
MARKET SENTIMENT
I'm glad we decided to stay on the sidelines for a bit.
Chart the NASDAQ and the DOW from Sept 04 to today and you see a series of 6 month cycles, each bottom ending a bit higher than the last.
http://finance.yahoo.com/q/bc?s=%5EIXIC&t=2y&l=on&z=m&q=l&c=
http://finance.yahoo.com/q/bc?s=%5EDJI&t=2y
Sep 04-Dec 04 (4 months) market goes up
Jan 05 - Apr 05 (4 months) market goes down
May 05 - Jul 05 (3 months) the market goes up
Aug 05 - Oct 05 (3 months) the market goes down
Oct 05 - Jan 06 (3 months) the market goes up
Jan 06 - ??? the market goes down
With very slight differences between the DOW and NASDAQ:
The first cycle (Sep 04~Apr 05) added 5.5% to the market after ~18% run up.
The second cycle (May 05~Oct 05) added 10% to the market after a 15% run up.
What does this suggest about the 3rd cycle?
1. Smaller run up - It only added 11% before receding
2. Smaller correction - If this one leaves a 5% gain, NASDAQ at ~2200 and DOW ~10750
3. In essence, excitement builds after earnings only to sag the next quarter. Then excitement builds again. Each time prices are rising.
I would look for continued easing and no strength until the end of March - 6 weeks away. Notice also that each cycle is peaking and bottoming at the quarters.
Individual stocks that are growing are affected but much less so. Consider MRVL compared against the NASDAQ
http://finance.yahoo.com/q/bc?t=6m&s=%5EIXIC&l=on&z=m&q=l&c=mrvl
Market sentiment can knock 5%~10% or more out of the stock price, but that's all.
For this reason I think the current price retreats are a combination of stocks getting ahead of themselves and a negative market sentiment.
If I am right, then we are seeing a bottom soon and some bouncing up and down.
We will be patient another 4 weeks and look for severe overselling - areas where the DOW/NASDAQ go below these trigger points: 10750 and 2200 repectively. Those will be buy moments.
MARVELL STOP
High flying stocks are getting knocked down 20%~25%. In MRVL's case, that would be $55~$60. earnings are out in 10 days and I know that they will be spectacular.
Either we bolt at $63 and buy back in potentially at $60 (and net a 5% gain) or we ride it out. We are sticking with our stop and buying back in within the next 10 days if we get stopped out
RANDOM THOUGHTS
Several people have asked me to review a few stocks: BCSI, WFMI, GILD and others.
Please give me a few days and I will.
I am looking at stocks that have solid fundamentals and have weathered the recent market downswing. So far I like
ET (we bought)
TEVA (I bought - not yet for LIVEROCKET)
JBLU below $10.50
GILD
PCP
NVDA
Housing short candidates: TOL, KBH
Housing materials short candidates: FRK, BMHC, and EXP.
I like EXP as a short because of the combination of exposure to a downturn in housing (they make sheetrock and cement products) and the high P/E - ~20 versus 7 for the housing industry. We already know that cement prices are slipping.....
I just returned from Circuit City where I looked at an assortment of iPod devices. I was interested in the Nano in particular. Not a single one of the competition came close to having the style or slim size of the iPod.
They jammed theirs with extras like voice recording and a radio. But they looked ugly. Taste is personal, but these were ugly.
And consumer electronics can't be ugly.
It can't be this hard. These manufacturers are getting it all wrong.
The solution is to make a device that allows for removeable flash and batteries. One thing that Apple misses out on is the inability to upgrade. Add that feature and you add a critical missing piece of the ease-of-use equation.
Over time the consumer has the choice of upgrading when and how much.
Naturally, this puts more power into the hands of the Flash guys and away from Apple. But it is what consumers want. At least let me pop the LiH battery out without having to pay a ridiculous amount to someone else.
It would make a lot of sense especially in a cell phone MP3 player.
MARKET SENTIMENT
I'm glad we decided to stay on the sidelines for a bit.
Chart the NASDAQ and the DOW from Sept 04 to today and you see a series of 6 month cycles, each bottom ending a bit higher than the last.
http://finance.yahoo.com/q/bc?s=%5EIXIC&t=2y&l=on&z=m&q=l&c=
http://finance.yahoo.com/q/bc?s=%5EDJI&t=2y
Sep 04-Dec 04 (4 months) market goes up
Jan 05 - Apr 05 (4 months) market goes down
May 05 - Jul 05 (3 months) the market goes up
Aug 05 - Oct 05 (3 months) the market goes down
Oct 05 - Jan 06 (3 months) the market goes up
Jan 06 - ??? the market goes down
With very slight differences between the DOW and NASDAQ:
The first cycle (Sep 04~Apr 05) added 5.5% to the market after ~18% run up.
The second cycle (May 05~Oct 05) added 10% to the market after a 15% run up.
What does this suggest about the 3rd cycle?
1. Smaller run up - It only added 11% before receding
2. Smaller correction - If this one leaves a 5% gain, NASDAQ at ~2200 and DOW ~10750
3. In essence, excitement builds after earnings only to sag the next quarter. Then excitement builds again. Each time prices are rising.
I would look for continued easing and no strength until the end of March - 6 weeks away. Notice also that each cycle is peaking and bottoming at the quarters.
Individual stocks that are growing are affected but much less so. Consider MRVL compared against the NASDAQ
http://finance.yahoo.com/q/bc?t=6m&s=%5EIXIC&l=on&z=m&q=l&c=mrvl
Market sentiment can knock 5%~10% or more out of the stock price, but that's all.
For this reason I think the current price retreats are a combination of stocks getting ahead of themselves and a negative market sentiment.
If I am right, then we are seeing a bottom soon and some bouncing up and down.
We will be patient another 4 weeks and look for severe overselling - areas where the DOW/NASDAQ go below these trigger points: 10750 and 2200 repectively. Those will be buy moments.
MARVELL STOP
High flying stocks are getting knocked down 20%~25%. In MRVL's case, that would be $55~$60. earnings are out in 10 days and I know that they will be spectacular.
Either we bolt at $63 and buy back in potentially at $60 (and net a 5% gain) or we ride it out. We are sticking with our stop and buying back in within the next 10 days if we get stopped out
RANDOM THOUGHTS
Several people have asked me to review a few stocks: BCSI, WFMI, GILD and others.
Please give me a few days and I will.
I am looking at stocks that have solid fundamentals and have weathered the recent market downswing. So far I like
ET (we bought)
TEVA (I bought - not yet for LIVEROCKET)
JBLU below $10.50
GILD
PCP
NVDA
Housing short candidates: TOL, KBH
Housing materials short candidates: FRK, BMHC, and EXP.
I like EXP as a short because of the combination of exposure to a downturn in housing (they make sheetrock and cement products) and the high P/E - ~20 versus 7 for the housing industry. We already know that cement prices are slipping.....
posted by Andrew at
6:21 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home