“David you have been consistent on your view of the post credit bubble recovery pace, and have nailed it. Most other commentators seem to be grasping at straws.
“Now that the 2nd tech bubble in 15 years is bursting won't it be interesting to see what bargains appear near year end? They may bottom before that but an inevitable tax selling / window dressing effect may get us the retest which could be buyable. Would you buy Facebook as an investment if it came off at year end and initiated a dividend or is the "leapfrog" risk too great?”
Thanks for a thoughtful comment and your interesting questions. They are partially answered by my comments above.
Additionally, price is everything. Or in the case of ‘new tech’, perhaps I should say, at least almost everything. It is far from certain that all of the ‘new tech’ companies will survive. I think you are right about a “retest which could be buyable”, but it may only be for a medium-term bounce. Remember the fits and starts for surviving tech following the 2000 bubble peak, not to mention the multiyear bases that followed, some of which have yet to be completed in this rapidly evolving field.
However, I think you have identified the best candidate in mentioning Facebook (weekly & daily). Zuckerberg is extremely savvy and a fast learner. The current problem is that too many other people feel the same way about Facebook. I suggest we watch with interest. If the S&P 500 holds up reasonably well, you might not get a real bargain by yearend. However, there is so much leverage in these markets that we cannot rule out downside shocks. When Facebook has an estimated PER below 15, and is paying a reasonable dividend, it probably will be a candidate for accumulation.Back to top