23/7 - It was the day...
-that the Internet Index fell below 70 and thus ran in a loss of more than 90% from its high (which was just above 700 in the early months of 2000).
-If buying is something one should do when it looks the darkest, then the telecom sector is a good buy, today. Bell South and LU reported a missery in the last couple of days. NT with a billion loss in its last quarter, didn't fare much better, Worldcom is history and Ericsson had a firesale of new shares at a 70% discount, just a week back.
This sector is and has been in for so much disappointment and so much clubbing, that somewhere there MUST be some serious bargains presenting themselves.
If only I knew who...
I'm still staring at EMC, Cisco, Microsoft and other frontrow stocks to buy into, keeping also an eye on smaller competitors Network Appliances, Juniper Networks and Extreme Networks.
My gut feeling is that the ongoing dip won't be the last one. I expect another in October, but no guarantees that it'll go as deep as this one.
After October, I believe we're in for a sustained up-period.
One gamespoiler, however, may be accounting practices...
If stockoptions have to be counted in on the expense-side of reports from here onwards (next year), we're going to se P/Es that will slump by probably 15-20%. The market is going to compensate for that (if it hasn't already done it).
Another word of causion:
Hear-say suggest that historically, bear markets have ended when the average P/E of the S&P 500 has come down to roughly 11. At the moment, the average is closer to 20 (and above, if we count in de-facto expences of stock options).
KD
