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Wednesday, March 10, 2004

Day Two of The Correction

The more speculative stocks that I follow are being capped at the knees. Macrovision is getting beat up. If it continues to drop, it will be a compelling buy as I'm a believer in their future markets. Akamai, a company that I'm not so hot on is also getting punked. About time. $2 billion for a company that is currently break even is a bit absurd. Could be a good momentum short. Nothing to support it right now.

Nothing to support the market right now either. Not even Greenspan can support it at these levels. The problem is that too much equity capital is sloshing around looking for a home. Everyone, *has* to be invested right now so they throw money at quality names, leading to market overextension.

But don't worry, this will end and we will go back up at some point. The quality of companies compared to early 2000 is significantly better. Not so many b.s. business models out there these days. Most of the tech companies I like have significant cash flow. (What a novel concept!) This improves their capitalization as well.

The only big risk I see to tech companies right now is dilution from option grants. This is a very big problem that not enough people are talking about. Barron's did a story on Adobe a while ago and kneecapped that company, but they deserved it.

1 Comments:

At 9:06 AM, Anonymous QUALITY STOCKS UNDER 5 DOLLARS said...

Interesting post on some thing in the market.

 

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