My Thoughts As women we love bargains and since the beginning of February the NASDAQ is down nearly 19%. Sound like a sale? Earnings season is now limping to the finish line and all eyes and ears are once again on Alan Greenspan and until he acts the sale will just go on and on. The question at the beginning of the month was what would Greenspan do? Well ... now we know ... absolutely nothing ! ... He is not J.P. Morgan, and will not 'bail out' the Nas. I am beginning to wonder what role a couple of very powerful people may be playing in this debacle ... and two names come to mind immediately ... Abby Joseph Cohen and Warren Buffet ... I am wondering if either or both of them are in some way playing into the demise of the Nas, technology, and yours and my investments, aren't you? ... Buffet has been very clear as to how he feels about tech and it's valuelessness to him and how only bluechips are investment worthy ... and so has Miss Abby ... Well at least some food for thought ... I have been wondering who has the money and power to manipulate the markets ... and of course the very verbal 'hater of tech' pops right into my mind. Who would benefit from the demise of tech is another question I have bounced around in my brain ... and guess who pops up? ... yeppers ... Mr. Buffet ... what stock is only available to the 'very rich' ... uh huh ... you've got it ... Mr. Buffet himself ... So ... as Tao Of Pooh reminds us ... "You'd be surprised how many people violate this simple principle every day of their lives and try to fit square pegs into round holes, ignoring the clear reality that Things Are As They Are." " ... and I am thinking ... when you fight what is, you fight an empty fight. and again from the Tao Of Pooh ... "It's not surprisng, therefore, that the Backson thinks of progress in terms of fighting and overcoming. One of his little idiosyncrasies, you might say. Of course real progress involves growing and developing, which involves changing inside, but that's something the inflexible Backson is unwilling to do." Perhaps it is time to move with the rhythm ... and buy/hold Wal-mart ... ~ LOL ~ ... and anything else Buffet or Cohen owns ... have you ever wondered how much gold they hold? ... "Nature never makes any blunders; when she makes a fool she means it." - Joshua Billings THE FEARLESS SHORT-TERM TECHNICAL MARKET IS GASPING FOR AIR ! Are You Still Testing The Water? Beginning to feel like that frog in the well? ... One step forward, two steps back? ... seems to me that is a good picture of the Nasdaq. High P/E tech stocks seem to go into convolutions like a landed tuna on the deck of a fishing boat. Even Miss Cohen's predictions have not put any weight on that line. Wonder why? Perhaps, the significance of Tuesday's and today's trading was that buying interest dried up almost immediately after the opening surge and was replaced with large-block-trade selling. This is the cause of the landed-fish or balloon syndrome. Think these stocks are running out of air? I would think that technically, the path of least resistance is down from here. We seem to be in a "sell into the Nasdaq rallies" mode. But why you probably wonder? Well to continue the landed fish/balloon analogy, air can be seen as the positive money flow--more buying on price upticks than selling on downticks. Does this look like a short set-up to you? High P/E tech stocks are suffocating/running out of air here because the minute they get air, they get cut off by institutional stockholders who are drowning themselves in too much of those out of favor tech stocks. They are going against the what is ... Here is what I think is the why? Fundamentally, stockholders still over-own technology stocks ... versus the S&P's 17.8% technology stock weighting. according to CNBC ... over-owned to the tune of $400 billion to $600 billion. Wonder how many of those Warren Buffet owns? ... bet none ... it is no secret that stocks are over-owned when they rally on light volume and sell off on higher volume. Do not think you need to be a rocket scientist to understand this concept. Here's the logic I had to come to try to understand: Is it likely that underperforming portfolio managers are still trying to own to many techs with above-market multiples--i.e., stocks that are valued above the 20 P/E average market multiple. The problem is that these stocks look to grow earnings far below their current price-to-earnings ratio prospects. Does this create a double-edged sword coming into the end of the first quarter. Are they hamstrung by overpriced-for-the-business-cycle tech stocks? Do they stand to underperform the S&P 500 and other portfolio managers who recognized the 'is' ... and downshifted from the tech rally in January to economically insensitive growth stocks ... that are sometimes referred to as ballast growth stocks. Bloomberg has suggested a downshift occurred ahead of 90% of all multi-cap growth mutual fund managers. Shorting fast-dropping stocks is the ONLY way to make a million-dollar portfolio turn on a dime when everyone is running for the exits. And in the "is" of Pooh why create brain damage for yourself trying to guess what the future earnings of great but priced-for-perfection companies like BEA Systems (BEAS), Sun Micro Systems (SUNW) or JDS Uniphase(JDSU) will be during an earnings recession ... as an alternative we may want to think about resting our tech-weary portfolios in companies with 30%, 50% or even 100% earnings growth prospects at 30%-50% discounts to their earnings growth rates. It may be time to ride some of the highly profitable non-tech stocks during the downleg of the business cycle... remember the 'is', and think about position trading and investing in the companies that will be the beneficiaries of transformation cycles that are related appropriately to the business cycle of the moment. When economic growth is booming, ride the fastest-growing companies because they get rewarded the most. When economic growth is contracting, shrug off those high P/E waves and move into the fastest-growing waves of demand growth that are not affected by the business cycle or a tech-spending bust. Is the New Economy about more than just tech? Remember, this is a hedge-fund-driven market, which means great opportunities for short-term traders. But you'll have to act fast. Speaking of hedging ... when was the last time you looked at the price of gold? Think everyone should learn to hedge? ... I do. It still remains that knowing what to buy and when to sell is critical in this market. Using a buy-and-hold strategy on aggressive-growth stocks is a bit like picking your way through a minefield of 8,000 mines! Huge profits have been made in 2001 on some carefully picked short term holding stocks ... ever wonder who made the money you lost? ... I have. Again ... don't wait for the Wall Street analysts to tell you when to sell or buy but always remember they are only right 11% of the time and usually behind the fall. So don't wait until AFTER your favorite stock has crashed and burned, know when to sell! Can you say, "Cisco?" ... Make it your mantra ... and remember it's crash ... "How do you become a tech-investing millionaire in a recession? Start as a multi-millionaire." MARKET RISKS Let's talk about about 'market risk' vs. business risk in the capital markets. Business risk is: the risk of a company or industry failing or going out of business. An industry in an early stage, has a higher business risk than a mature industry. The fastest-growing sectors of our economy are also the most immature relative to the economy in general. Or they wouldn't be growing so fast now would they. ~ L ~ ... Immature or emerging industries are much more volatile because they are far more affected by 'market risk' than mature industries ... especially in times of contracting earnings growth. Wanna know why? The value of immature or emerging-growth companies'stocks is heavily dependent on estimates of economic conditions and future cash flows several years out, as opposed to the cash flows of mature, relatively predictable industries today. To arrive at a value for a stock today, these future cash flows are first estimated and then discounted back to the present, at a rate usually equal to zero-risk investments like T-bills plus inflation. Once a cash-flow projection is arrived at, a multiple is placed on that future cash flow to come up with a stock price today. If the market strongly believes in huge cash flows in the future, they will pay more for the company today. This means they will pay a higher P/E than the average market multiple. If a company's cash flow is zero today and projected to grow many years out, a change in the cash flow has a much greater effect on its present value than if it is closer in time. As a result, small changes in the market's evaluation of the future, i.e., future cash flows as represented by current price-to-earnings ratios, has a greatly magnified effect on the present values of the least-mature sectors and companies in our economy. This is why investing early in the business cycle is so important to investing in emerging companies. Immature companies grow fastest and thus get to positive cash flow earliest, riding the wave of an expanding economy. The appropriate time to buy immature companies is early in the expansion phase of the business cycle. When the economy has peaked at its growth for the cycle and started its growth contraction, immature companies' cash flow prospects get pushed away. Thus, their present value becomes lower because it will take longer until their cash flows become significant. Can you successfully invest in growth stocks without correctly analyzing where the business cycle is at the present and where it is going in the near future? There is a time to buy and ride aggressive-growth stocks and a time not to. In a growing economy, hyper-growth stocks outperform other stocks because they have the wind at their back and consistently outgrow and exceed high expectations of earnings growth. That's the formula for making a stock go higher. In contracting growth, the opposite occurs in most cases--economically sensitive stocks fail to meet growth expectations because they have the economic winds in their face. Aggressive-growth investors buy economically insensitive but out of favor stocks in a recession that will exceed low expectations of earnings growth. The common denominator is exceeding expectations--the only true way a stock attracts more buyers than sellers. Please keep in mind that this is my personal opinion and in no way infers or implies that you should or should not buy or invest in any stock or sector at any time. Always do your own homework ... due diligence ... before buying or selling any stock and check with your stock broker and brokerage firm before making any investment decisions.

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