The Market

So a while back, when I first started this blog, I thought that the market had bottomed out. March 10 was the day I thought to be the bottom. Right around this time Bear Sterns had collapsed and been partially saved by the Fed and partially saved by JP Morgan. The S&P 500 Index hit 1273.37, and began to slowly, with great volatility move upwards. However, since the 08 peak in May, the market has lost almost all of its gains. Its down a little more than 10% since May 19th, and currently just above 2008 lows. If the market moves below this, which has been acting as a support, stocks could continue to fall for months.
Because I'm beginning to realize I was premature in calling a bottom (though theoretically March 10 still is the bottom) I think that some of my stock picks should be reassessed. I picked Citigroup back in March, with a price of 20.71 a share. Obviously now is a better time to buy, as you can get shares for 3 bucks cheaper. However, I would hold off on C, wait for any more write downs, analyst downgrades or macroeconomic bad news. Citi might drop even further, which could spell an even better entry point for what I still believe to be a good long term play.
I want to reiterate that most of my picks have done well regardless of the current demise because they are strong companies which were completely undervalued during the last round of market lows. There are many more out there, and even more that overall market sentiment is down so far.
I'm waiting for a sell off in companies like Apple and other solid companies who are not affected directly by sub-prime/credit losses. I missed getting in on this sell off last time (except I did recommend buying AAPL) and I've regretted it. Below I've included a couple of entry points for some stocks I'm watching. These entry points are based on the previous sell off, some technicals and looking at price valuations.

Google Inc. (GOOG)
Buy target: $500
Fwd P/E at this price: 24.85

Apple Inc. (AAPL)
Buy target: $150
Fwd P/E at this price: 28.85

Research in Motion (RIMM)
Buy target: $100
Fwd P/E at this price: 25.77

Wal Mart Stores Inc. (WMT)
Buy target: $55
Fwd P/E at this price: 15.89

WiMax Creates Huge Investment Opportunities

Wireless Internet is pretty sweet. But its not perfect, in fact its far from it. The range on most wireless is in the hundreds of feet, providing little maneuverability and restricting use. While you can easily get service anywhere within your home, getting service anywhere around town is nearly impossible, unless your lucky and your town has wireless. WiMax is a joint venture between some tech giants, Google (GOOG), Time Warner (TWX), Intel (INTC), Sprint Nextel (S) and also the lesser known Clearwire (CLWR). The basic idea is creating a wireless network that has the range of a cell phone (several miles) with greater bandwidth than current wireless networks. While there have been a few attempts at similar projects before, this one may be different due to the huge players involved. While it poses some upside for these big companies, it may do the most for the smaller Clearwire. Clearwire is a builder and manager of broadband networks. It stands to profit hugely if WiMax succeeds, as it would probably be acquired by Sprint, or another of the larger backers.
WiMax may become the next step in communication, and the seriousness of this venture can be seen by the involvement of Google, Time Warner and Intel. This deal, if successful, will change the way that we communicate, and also will change the mobile phone market, as demand for this product will sky rocket. Getting a little exposure, or at least keeping tabs on this story, is a good bet.

Tech Sector Upside

The Technology sector has been battered over the past few months as stocks tumbled and the economic situation deteriorated. The sector is down -12.4% this year. However, before the recent catastrophe, the tech sector was growing quite nicely. In fact, it was up 108.5% since October of 2002. This is second only to the Energy sector. Tech stocks grew an average of 14.63% per year over the past seven odd years. Unlike real estate and some financial stocks, this was not due to irrational exuberance or bubble atmosphere, but on new innovation, higher demand and better productivity. Look at the iPod, the progression of computers, the speed of Internet, Google and HiDef televisions.

So whats changed? Why are tech stocks doing so terribly? Well, I'm not positive. But a lot of it has to do with investor sentiment. Investors leaving the stock market and pulling out of very popular stocks. Many of these are technology sector firms, like Google. This has proved deadly for stocks within the technology sector. Also, there is the real fact that people buy less tech goods during a recession, (do you buy the iPod or the groceries?) However, higher demand from overseas will counteract this to some degree. This can be attributed to the ever growing middle class of India and China, and the weak dollar making our products seem cheaper. Even if some of the price decreases are warranted by decrease demand for technology, I think these stocks still present a unique value buy.

The graph above shows the S&P Technology Sector Index. It shows the massive losses that the sector has experienced over the past year. The sector is down -12.7% in 2008, compared with -6.53% for the S&P at large. For contrast, the Financial Sector is down -8.92% in 2008. This means the tech sector is performing worse than the financial stocks that are right in the middle of the meltdown.

The Tech sector represents a huge value opportunity right now simply because the stocks have been beaten so low. Like financial stocks, these companies are trading at fractions of what they were a year ago. However, unlike financials, they have no real flaws behind them. These companies are not going anywhere, and if your willing to wait for a little bit, they will yield HUGE returns in the coming months.

Top Tech Stocks

Google Inc. (NASDAQ:GOOG)
-Market Cap: 146.60 Billion
-current year forward (CYF) P/E: 23.97
-CYF PEG: .9374
-52 wk HIGH/LOW/CHANGE: 747.24/412.11/-.78%
-YTD HIGH/LOW/CHANGE: 691.48/412.11/-32.35%

Apple Inc. (NASDAQ: AAPL)
-Market Cap: 143.33 Billion
-CYF P/E: 29.68
-CYF PEG: .957
-52 wk HIGH/LOW/CHANGE: 202.96/80.60/61.43%
-YTD HIGH/LOW/CHANGE: 198.08/119.46/-22.84$

Microsoft Corp. (NASDAQ: MSFT)
-Market Cap: 267.58 Billion
-CYF P/E: 15.37
-CYF PEG: .603
-52 wk HIGH/LOW/CHANGE: 37.50/26.87/.7%
-YTD HIGH/LOW/CHANGE: 35.60/26.87/-19.24%

Cisco Systems Inc. (NASDAQ: CSCO)
-Market Cap: 142.81 Billion
-CYF P/E: 15.56
-CYF PEG: 1.044
-52 wk HIGH/LOW/CHANGE: 34.24/21.77/-1.12%
-YTD HIGH/LOW/CHANGE: 27.07/21.77/-11.49%