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Bear or Bull: Which Are You Today?


Bears want bad news to be sold, which it is today...

From the Bull Camp:

The most positive outcome that could come out of today would be a continuation of Nasdaq out -performance. This in no way means the Naz will finish higher on the day, but one can never tell in this market.

It's hard to argue that earnings and guidance from myriad Naz stocks have been good and probably better than expected. So for a GARP (Growth at a Reasonable Price) guy like me, I still see lots of names that are just very good values, some stunningly so and especially in relation to valuation characteristics related to various balance sheet ratios.

Another positive outcome would be that bad news is interpreted in the near term as good news from a "maybe the Fed will actually cut rates again in our lifetime" perspective, since given recent news, econ. reports and benign core inflation would certainly leave the door open for it to have taken rates down 25-50 bps at the last meeting. This would still leave (short term) rates relatively high near term, adjusted for inflation.

From the Bear Camp:

Pretty much turn all of the above around. Bears want Naz to underperform and beta to get further trashed. Bears want to take the cheap stocks down even farther, thus breaking the hope of folks who feel "at least my beaten up names can't go any lower than 1.5-3 times net cash".

Bears want bad news to be sold, which it is today. Bears want the Fed to be stuck, as some people think it is, and fear that cutting will create a potential larger problem for the USD. Lastly, they want more fear of the unknown. That is something that the bears can claim as theirs and something the bulls have no defense against, other than saying the magnitude of bad news is priced in.

My own take is that I think the Naz will outperform as the Cisco (CSCO)s, Apple (AAPL)s, Broadcom (BRCM)s and a good stock pile of Internet names are really cruising nicely along.

Additionally, with the potential of cost containment being a very important goal of most industrial corporations, many tech names appear poised to deliver above market growth at market prices. The biotech space is also a bastion of GARP values currently and biotech represents a solid weighting in the Naz.

Meanwhile the financials are a treacherous lot. I will be buying the big breakdowns and selling the bounces until I feel that valuations more fully reflect peak earning levels.
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Positions in BRCM and MS.

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