The global economy and markets continue to come to grips with crisis. We read up on the daily catastrophe for a few moments before heading into work. Yesterday the spaghetti stimulus package, today the meltdown in Eastern Europe and the tale of woe goes on.
As largely growth and technology research and investors we sit most of it out. The core names have done very well since the November low and have held up reasonably well since.
Is there anything to do now? The short answer is not really. We hold a position in core research names (ADBE, CSCO, DDUP, GOOG, etc. and some turn-around situations like NVDA, YHOO and MOT.) It’s not a time to go overweight any or many since near-term business trends are lacking and prices are likely to bounce around until clearer trends emerge.
There are major sideshows in GLD and OIL but they remain pure speculation for us. Shorts like APOL are intriguing and soap opera names like PALM offer a few trades here and there. It has certainly been a "swing trade" kind of market for those that are in a position to pay careful attention to the market.
We see a major product cycle coming for many companies in the technology business. The fundamentals are going to improve and many of the companies are trading at valuations that argue against selling out or going short.
As hard as it may be sometimes the best answer is to sit pat with your hand. You’ve done your research, picked out the best (in our case 10 or so) names and do not let the news buffet you into unprofitable actions.
Kara Swisher recently wrote that the large technology companies have a "king’s ransom" of cash to spend and there will come a time when they will. If any meaningful portion of the $100B+ in cash gets deployed for strategic M&A, owning the right companies will be very rewarding.
[Disclosure: Research 2.0 has positions in nearly all the companies mentioned in this post at the time of this writing.]
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