I haven't bought or sold since the stock was in the low-mid 40s. Right now, Mr. Market is acting on pure fear. Unhappily, sometimes that fear can feed into the economy, and reading the CCs from various semiconductor companies suggests that sometime in mid- to late July, orders dried up. I posted excerpts from Lam's CC a few weeks ago, here is a quote from their CEO:
I would have to say that I have no confidence or very little confidence based on kind of the environment that we're in right now. I think, it wouldn't be appropriate for me to really talk about specific customers. But clearly, what you're suggesting is that, given where we think the shipments are going to be for September that it implies that December is better. That's certainly true if the customers execute the plans that they are currently communicating.... But what's going to happen on a quarter-by-quarter basis, I think is going to be volatile.... Up till a number of days ago, I would have expected that our shipment environment would not be down as much as it is. We're essentially down 27%, June quarter to September quarter. The reality is with this volatility, I mean, if I had another conference call in 2 weeks, I might be telling you that it's gotten better. I mean, it really is one of the most kind of unpredictable environment that I've been a part of in many, many years.
I wish I could say that I sold everything in July. Or at least half of everything. I didn't. I still have a long position in Sandisk, but not as large as it was 6 months or a year ago. My cash position has been rising percentage-wise over the last three weeks because my equity position has been falling, not because I was prescient enough to see this crash coming. I think at this point we can call it a crash. There are plenty of stocks that have gone down 30-50% over just the past 3 or so weeks, and I have a position in some of them. If the real-world global market freezes up, then this downward movement will have proven justified. With so many people calling for reducing debt now and freezing government spending, it may happen that way--that is perfect recipe for making bad economic times worse and perhaps even inducing a depression. It is, actually, what happened in 1930-31 and what induced that depression. Mr. Market, however, is wrong as often or maybe even more often as he is right, and I still find it difficult to believe that Mr. Bernanke and other central bankers will make the same mistake as they made in the 1930s. There is plenty of money sloshing around, both in some governments and in private hands, and at some point that money will be put to better use than feeding a bubble in gold, silver and other "precious" metals.
But we will see. Certainly, we live in "interesting times." Which is only desired by crazy people or by those who have never lived in or actually studied interesting times. |
