jonreagan

8 Tech Stock Picks for 2008

Thanks for a very good and informative article....nice to see someone try to identify tech opportunities outside of the usual suspects of AAPL, GOOG, RIMM, INTC, etc.....the high profile names are always subject to suspicious "downgrades" and gaming, especially just before earnings announcements.

The only one of your picks I'd be nervous about is Amazon....because it's a retailer. In spite of its annoucement of "its best year ever"--which I don't doubt--it's unfortunately a great stock in a bad neighborhood. Same dynamic is happening in financials as GS gets trashed along with shit-houses like Citi, Bear Stearns, Countrywide, etc. Nobody said markets were rational.

Six Stocks to Buy, Five Stocks to Short

The broader point here is that retail investors need to be aware of the institutional forces at work, and realize that they are a pimple relative to what is really driving the market. No coincidence that there's a hedge fund redemption coming up this Friday; we saw the same kind of rampant dumping of great stocks like AAPL and RIMM by major funds before a similar date last August; they all recovered nicely afterwards. These stocks have great fundamentals, and most importantly, have product lines that people want; "the Google", as W would say, has a +55% market share. Unfortunately, the fundamentals aren't enough to predict market behavior, which has become totally irrational. CMI dropped 22 points after announcing solid 3rd qtr. earnings, which didn't meet consensus estimates. GRMN got hammered after the Nokia/Navteq deal was announced last month. A few days later prior to the market opening on Oct.31st, they announced a strategic move to buy Tele-Atlas....they get hammered again. After the market closed the same day, they announced a great quarter with record earnings....you can guess the rest;down goes the stock again in after hours trading.
I've come to the conclusion that the key word--whether trading or investing-- is momentum. Find out the "hot stocks" that the big boys like, and know the calendar so that you can hop off before you get burned. Otherwise, as a previous writer suggested, you'll end up with S&P five-star stocks like PG and GE that spend their lives going sideways.