Replies to post #4495 on Marvell Technology Inc (MRVL)

[peacecorps]

That's an interesting article - the bull's case is that the corporate profits can go strong within an weak economy - but I think the rationale is quite flimsy. When you have a nice productivity growth, you can achieve good profit growth with the little revenue growth.

However, if the whole pie is shrinking and costs remain steady (assume the small productivity growth offsets the energy/material costs), how can you continue the profit growth? The article shows that the profit is strong but the growth rate has come down a lot.

Sold some QID in the morning - waiting to buy back.

[randygee]

oh, I dunno...how bout record corporate earnings for like 14 quarters straight?? and the market is just catching up??

[SyndicateTwo]

Randy is correct. You guys need to learn something about how the market works. Bad economy doesn't = bad stock market. Stock prices will move in the direction that people with far more money than you and I and everyone out there combined have say it will go.

Right now, we're in a third year Prez cycle, which just happens to be the strongest year for stocks within any given cycle. You couple that with record overall revenues and profits and stock prices that for the most part havent' gone anywhere in 6 years and the fact that there's so much money out there looking for a home and finding it in private buyouts, you got a market that's made the word 'Short' a four letter word.

Companies are buying back their stock which lowers the amount available on top of all the buyouts and private equity companies removing all that stock out there. You're left with a huge amount of money chasing fewer and fewer shares. Simple supply and demand.

And yes, it will lead to a bubble again. But not yet. The valuations are nowhere near out of line. At best they're fair value right now, but really that's a subjective thing.

Stop trying to pick a top here in the market. You'll do far better to buy the dips than time the top. The top will be obvious in the rear view mirror. There will be huge signs of the end of this. Things like valuation problems. Things like negative growth in more than 30% of S&P companies. Little things like that will start to show first. Then the entire house of cards will come down. But now? Not even close.

The other reason why the market is going up is because economic weakness signals an easier Fed on monetary policy. That always leads to better growth ahead. The stock market always catches that before the economy actually turns. We actually might this time not see a recession and a market cycle that doesn't go bad. Eventually it will, but the housing market might have actually fended off what otherwise would have been a much worse situation right now.

Housing is coming down. But so many people are sitting on such huge equity, they're protected. It's just the late buyers from 2004 to now that are screwed. And they hardly represent the majority. Housing will get ugly, but until it does, and it hasn't even started yet, don't fight the trend.