CW on RM: Big-Cap Tech Is Back

Big-Cap Tech Is Back
09/26/2006 9:18 AM

The market snapped back from the red yesterday morning to rally into the close with some big gains. And those gains once again were led by tech, as they have been since the market bottomed (at least in the intermediate term) in late July. Even the semiconductors reversed and ripped higher, closing up 2% on the day.

The rally from the July bottoms has been broad and strong, with the Nasdaq up more than 10% from its lows. And, despite being written off more times than an oil man's Enron investment on his tax return, the biggest leader in the market has been big-cap tech.

Yes, big-cap tech has been in full-on bull mode. Oracle now up more than 40% on the year. Microsoft is up more than 20% from its recent lows. Cisco is up nearly 30% since it reported its most recent quarterly results. So much for big-cap tech's exaggerated rumors of death.

To be sure, the whole group is not exploding higher. Intel has crawled back from its lowest points of the year, but it's still bumbling along just about 10% above its recent bottom. Dell, of exploding-computer and failed-MP3-player fame, is also about 10% above its summer lows.

Even recent qualifiers for "big-cap tech" status, Apple and Google have bounced strongly from recent lows. Apple has been really smoking from the mid-$50s to the mid-$70s since summer, with a 30%-plus rally.

With the retail and bank indices each up single digits from their summer lows and with energy and commodities in free fall, big-cap tech is back. "Is" is the operative word in that sentence, because if Microsoft's Vista spurs any meaningful upgrade cycle in PCs, if Intel's new chips rock at a low temperature, and if Cisco keeps enjoying the fruits of accelerating enterprise tech spending -- well, multiples can continue to expand and estimates can go higher. And that would provide a double-whammy to fuel these stocks further.

I won't chase these names right now, but I continue to hold Microsoft as my biggest position, and I'm holding my more recent addition of Cisco steady, too.

P.S. Speaking of Enron, can you imagine how big and powerful that firm would probably be if it had managed to hide the corruption long enough to enjoy the huge energy boom? That's a scary thought. Or perhaps a beautiful thought, because they did get busted and justice was served.

"A Way to Deal With Your Blog Trolls?"

A friend of mine sent me this article with the comment “A way to deal with your blog trolls?”.  One of those trolls, er, readers of mine gave one of their usual barrages of always-anonymous comments in three or four of my posts last night.  My favorite of the night is, “ Saw you....besides your hair looking all greasy, as usual, you added nothing!”   

I think I love these folks who care so much about me that they catch my appearances on TV and keep coming back to read this blog...and read my stuff from other outlets to boot....and even care so much that they help me generate traffic with their funny comments on my blog.

But I guess I could go this route:

Director takes swings at critics -- literally

VANCOUVER, British Columbia (AP) -- Tired of the criticism of his films, controversial German film director Uwe Boll took on four of his critics in a Vancouver boxing ring, and ended each bout with a knockout.

The director of the vampire flick "BloodRayne," based on a video game and starring Kristanna Loken and Ben Kingsley, issued a fight challenge to his critics several months ago. Fifteen responded.

"I like now the critics," Boll told a news conference after the fights on Saturday. "Everybody who was in the ring showed (guts). Nobody dived.

Hey, latest anon, got the guts to meet me in the ring? ;)

Jonesing For But Leery About Dylan's Concert

I'm pretty jazzed to have some great tickets to go see Bob Dylan for the
first time ever in a few weeks.  Even though I'm pretty jaded by his Apple endorsement (that reminds me how my good friend Joe used to scream "I'm jaded!" along with Garth's cover of Billy Joel's hit "Shameless" instead of "I'm shameless" Gawd, did the corporate playlists ever kill that song back in 1991/2 in Texas).  And I'm still banning music from post-1982 too, so I can't speak to his newest album (though I will listen to it before I go to his show...).

At any rate, I had to pass on this review from my favorite music critic/analyst/whatever, Bob Lefsetz wrote up

So now plagiarism is the FOLK TRADITION?

The reviews of this album are demonstration of why you can no longer trust print/reviewers. To look cool, to be a member of the club, to remind you of the way things WERE, you've got to dig deep and give a good review of this record. Whereas you've got to listen to it almost a dozen times for it to reveal itself, and almost nobody's gonna give it that time and should you have to TAKE the time? Isn't that like saying if you're alone on an island with a member of the opposite sex for three months you'll grow close?

This is not a bad record. But it could have used an outside producer, the sound is anything but revelatory, never mind ear-pleasing and Dylan could have used a Jacques Levy.

If you consider this to be classic, you've never listened to "Blood On The Tracks", never mind "Bringing It All Back Home", "Highway 61" or "Blonde On Blonde".

Now if you were alive back then, if you weren't looking at the past through rose-colored glasses like the aforementioned writers, you'll know that Bob Dylan released a turkey, "Self Portrait", and after the reviews were SCATHING, he went back into the studio and released the almost classic "New Morning" within six months. Maybe if they gave this guy BAD reviews, he'd come to his senses and make something more accessible.

Oh, don't tell me "Modern Times"' virtue is its INACCESSIBILITY. "Anna Karenina" isn't inaccessible. And if inaccessibility is the criterion, "Trout Mask Replica" is the best record ever made, maybe challenged by "Metal Machine Music".

This is not a word of mouth record. These same worthless print writers are selling this record. Getting baby boomers who want to look cool and in the loop to buy it. Because if you heard it at a friend's house, you'd NEVER buy it!

P.S.  Tune in Friday -- New Music Friday (with a twist) returns!

CW on RM: 10 Market Thoughts

10 Market Thoughts 09/22/2006 4:28 PM

It was an intense week of action in the markets, and there was a lot of macroeconomic news flow to blame it on. Here's what's on my mind as we close out the week.

1. If spiking energy didn't matter to consumers while they kept spending over the past few years, why should we think energy's collapse will matter in our consumer outlook now?

2. Is there any, any, any remote possibility that housing will actually strengthen again?

3. What if, now that even DaimlerChrysler has all but thrown in the towel and that the Philly Fed and who knows what other macrodata are being hit by Detroit's problems, Detroit's fundamentals have finally bottomed?

4. What if it turns out that the automakers actually roll out some products that consumers really dig?

5. Why can't the automakers become "tech" companies and innovate in ways they used to in decades past?

6. Was it too obvious to buy Google on Yahoo!'s warning? Sure was a lot of commentary on both sides of that bet.

7. Is it time to bet that Nokia will be OK this quarter and guide fine for next?

8. Should I pair that idea with a Motorola short because the market has deemed that Moto can do no wrong lately?

9. I complain all the time about the fallacies of stereotyping, er, grouping stocks by market cap and sector, such as "big-cap tech." That said, is the strength in Cisco, Motorola, Microsoft, Apple and Oracle a function of money flowing into "big-cap tech" as a sector because the rest of the world doesn't see it my way?

10. What if the Zune does bomb as badly as most all the world thinks it will? Does that present downside risk to Microsoft? Probably not. Would a Zune boom present upside to Microsoft? Probably so.

I am going to get outside and hit some tennis balls on these last days of summer-like weather here in New York City. Thanks for reading, and have a great weekend.

StockPickr.com Takes Off...

My boy James Altucher, oft-mentioned in my adventures on these pages, has just launched his new stock-referral service at StockPickr.com.   It's pretty interesting stuff, as you enter in your favorite and least favorite names and the site generates new ideas for you based on hedge funds and super investors (Buffett, Icahn, Soros, Miller, etc) and individuals who have similar stocks.   Click here to check it out.

All Wet, But Having a Blast on CNBC Squawkbox

Last Thursday I had a 7am spot on the Squawk. I was up at 5:30ish and got cleaned up and ready to rock n roll. Armani leather jacket in hand, I stepped out into the misty rain and ran across my bricked street and hopped in the back seat of the Town Car waiting...the driver was surprised to see me and said I had the wrong car. Uh oh.

No other cars were waiting outside, and it's now 6:20 so there was no sense in wasting any time trying to track down the right car. Now being a cowboy from NM, I'm an utter umbrella incompetent. I lose them all the time (no shocker there, right?), and I don't currently have one that I know of. So I wrapped my jacket inside of my WSJ and after a few minutes found a cab on Houston. To the studio in a skyscraper in midtown then, and I find the doors locked. Sloshing through a giant mudpuddle and I get inside through a side door, rather soaking wet (as noted by a commentor here). No hairdryer (and no handdryer in the bathroom for me to pull a Desperately Seeking Susan)...what can you do? Was still a blast to get on there and talk Revolution.

A Cody News Spot: Life is Better?!

Life Is Better; It Isn’t Better. Which Is It?

By DAVID LEONHARDT Published: September 20, 2006

When the first snow falls on the North Shore of Chicago this winter, Robert Gordon will take his Toro snow blower out of the garage and think about how lucky he is not to be using a shovel. Mr. Gordon is 66 years old and evidently quite healthy, but his doctor has told him that he should never clear his driveway with his own hands. “People can die from shoveling snow,” Mr. Gordon said. “I bet a lot of lives have been saved by snow blowers.”

If so, most of them have been saved in the last few decades. A Canadian teenager named Arthur Sicard came up with the idea for the snow blower in the late 1800’s, while watching the blades on a piece of farm equipment, but he didn’t sell any until 1927. For the next 30 years or so, snow blowers were hulking machines typically bought by cities and schools. Only recently have they become a suburban staple.

What an awesome "Flip It" this one is -- the world is better for most Americans (really?!)...and also -- after all the whining about hedonic adjustments by our bureaucrats understating inflation, Leonhardt explains how they might be dramatically OVERSTATING inflation.   Provocative ariticle.

ESPN Blows It on MNF

I'm gonna write up a whole post about this in the Digital Revolution theme, but for now, let me just say that I watched a few minutes of last night's Pitt vs. Jacksonville game -- you know, the MONDAY NIGHT FOOTBALL for 2006 version -- and I'm just appalled at how badly ESPN has dropped the ball.  How hard could it be to find some announcers with some sort of clue and some sort of personality in the same vein as Madden and Summerall?  And really, more to the point, how hard could it possibly be to have hyped ESPN's Monday Night Football so that it could capture some of the relevance and momentum of ABC's long, long MNF program.   MNF on ESPN could have legitimized that network like nothing before it ever could.   Fire that producer and get out of the Revolution's way, ESPN.

Launching Cody's Digital Revolution Newsletter

I'm pretty excited to launch my tech newsletter today, appropriately called Cody's Digital Revolution Newsletter.

The first issue, published today, is titled: Five Stocks That Will Win Big in The Digital Revolution.

You can click here to read a sample of it.

Or click here to sign up for the newsletter -- we're kicking it off at a special offering of a one year subscription for $129 at 35% off the list price.

Thinking Positive (and It's Not Just "Latinos" Who Do So)

Readers surely know that part of my whole Flip It™ mantra is centered around overcoming the incessant whining and negativity by the mainstream media, the mainstream public and mainstream investment pundits.    I got this newsletter today from TrendCentral.com, a company that, in full disclosure, is affiliated with my buds at CAA -- the same folks who brought you the lonelygirl15 headfake/new video paradigm -- and while I think it's a mistake to try to break down analysis by "race" in this acceleratingly (ooh, nice word, Cody!), melted-pot-society, the analysis itself sure rang true to me:

POSITIVITY
With so much negativity in the world—the challenging economy, continuing military conflicts, worldwide famine and disease, and even the mean-spirited tone of celebrity gossip—young people are seeking positive messages and reminders that the world is, in fact, a good place. At the same time, although young Latinos are also concerned about the world, they remain enormously positive in their outlook and perspective. This is a generation that feels remarkably optimistic about their place in the world in the context of how far they’ve come. They see milestones within their reach that their parents only dreamed of—going to college, buying a house, starting a business and they feel confident that, as a generation, they are bound to be more successful. They see Hispanic politicians (Villaraigosa in L.A., Martinez in Miami) in the news, Latina celebrities on magazine covers (Eva Longoria, Shakira), and Latin trends invading the mainstream (Reggaeton, telenovelas, obsession with car culture, and overtly curvy looks on the runways).

However, this relative optimism is not often reflected in the marketing and entertainment they see. Much of the media messages aimed at Latinos focus on the risks they face—the risk of not graduating high school and making it to college, the risk of teenage pregnancy, or the scourge of violence in their schools. Very few marketing campaigns or entertainment properties offer a view that reflects the optimism of this Latino generation. The hunger for positive aspirational Hispanic portrayals was reflected as a number of participants applauded Desperate Housewives for showing a Hispanic family living inside the house, and employing their own gardener.

Right on!