'The Top Stock Picks Of 2004'
As we head out of the
year 2003 and into 2004, I want to wish everyone a happy, healthy,
safe and prosperous new year. I don't want to sound like Scrooge, but once
again, as I do every year, I will try to be your voice of reason. In the next
couple of weeks, you are going to be inundated with the..."Top Stock Picks Of
2004"..."The Big 10"..."The Top 20"..."Seven Stocks For The Next Decade"...and
so on and so forth. You will also get target prices for everything under the
sun. Unfortunately, in my business, it is fashionable to predict...and
predictions is what pundits give. BUT...as you know, my favorite line for the
stock market is simple..."I DON'T EVEN KNOW WHAT I AM EATING FOR DINNER
TONIGHT."
There are just too many variables to deal with to
try and predict markets a year out. You should know that by now. You don't
need me to tell you this, as every major high-paid strategist on Wall Street
missed the worst bear market in 70 years. I just want to interpret the markets
today and just try to stay one step ahead of the action. In 2003, for these
woeful strategists, the broken clock finally came around to their side. Yes,
the bulls finally got it right. What amazes me is the short memories this
business has. The same people that destroyed your wealth in the bear market
are being paraded out like they are gurus. I am not going to mention names
today because it is the holiday.
One man who was been paraded on that certain cable
channel I haven't watched in seven months was lauded for his pick of the QQQs in
2003. Unfortunately, that same man's favorite pick in 2002 was the
QQQ (QQQ | Quote | Chart | News | PowerRating)s. Oh
yeah, his favorite pick in 2001 was the QQQs. Oh yeah, his favorite pick in
2000 was the QQQs. After an 85% drop in his favorite pick, he kept coming
back for more...and finally he was right. All he needs is another 250% gain
and he will be back to even. Amazingly, he said he turned bullish a year and
half ago...and the interviewer let this statement go as the gospel.
Another Internet fund manager was paraded on that
certain station because he was up over 50% this year. BUT...he is still down
over 85% over the past four years. This was not brought up.
A certain TECH NEWSLETTER writer is being slowly
heralded again as a TECH/WIRELESS/FIBEROPTIC guru as his subscribership is
moving back up. Never mind that his picks went down 90%...he is having a good
year this year, with a bunch of speculative names. Never mind that it was the
speculative picks that hammered investors.
Yes, I can go on and on and on. My point is not
to put these people down. My point is to empower you to not listen to all the
noise. AND if there is any business that has a whole load of noise, it's this
one. I say go ahead...listen to these people, after all, I am a radio
guy...read what they have to say...but...DO YOUR HOMEWORK. Treat your
investments more importantly than you have in the past. I have met too many
people that lost 50%...60%...70%...80% of their savings because of a lack of
knowledge and a lack of discipline. People spend more time on the cereal
line deciding on Rice Krispies or Cheerios than their money.
GET THE HINT! The
market is the final arbiter...not opinion...not hope...not prayer. I know. I
have tried them all.
Lastly...SELL DISCIPLINE...SELL DISCIPLINE...SELL
DISCIPLINE...SELL DISCIPLINE...SELL DISCIPLINE. Since last March, you have not
had to worry too much about a sell discipline. BUT...if there is anything I
can promise going forward, it's that there will eventually be another bear market. Are
you just going to sit there watching your accounts dissipate or are you going
to learn how to take action? I will let you decide.
Oh yeah...the market.
So far, every pullback has been controlled,
rotational and short-lived. What more can you say? Until that changes, the
"market" gets the benefit of the doubt. We are now in the ninth month of this
bull move. I have no clue how much longer it lasts or how far it goes.
Shorter-term, I think the Dow-types are
extended here as the Dow is still about 500 points above its 50-day average.
This will make make it vulnerable to a consolidation/correction/rest...but
does not mean it has to. Any pullback would be buyable at this point.
Recently, I thought the
Nasdaq ($COMPQ.X | Quote | Chart | News | PowerRating) was ready for a 10%+ correction. It hit
6% before turning right back up. The Nasdaq is
currently in a three-month trading range after its move up. It is normal to
consolidate after such a move. While many TECH stocks are acting toppy,
a breakout above 2000 for the Nasdaq would be more confirmation that this bull
move has not breathed its last. If the Nasdaq can't get over the 2000
hump in short order, the negative divergence would remain...and then we can
start thinking about trouble ahead again. We would just need to keep overweighting NYSE stocks as I have suggested recently.
At this time, my staff and I want to wish each and
everyone of you a Happy New Year.
Gary
Kaltbaum
