Wednesday, August 02, 2006
Does The "Dogs Of The Dow" Theory Apply To The Nasdaq...?
The Dogs Of The NasdaqGeorge Putnam, Turnaround Letter,
www.forbes.com 08.02.06, 12:40 PM ET, BOSTON -
Stock market volatility has increased in recent months. In most areas of the market, this volatility went in both directions, up and down. But in one area, the largest Nasdaq-listed stocks, most of the volatility has been downward. The Nasdaq 100 index has the worst performance so far this year of any of the major U.S. stock market indices, losing more than 10% through July 27.
There is very little about investor behavior that we are willing to try to predict. However there is one thing we are very sure of: Investor behavior and preferences will change. And this change can be rapid and dramatic. Frequently, the worst performers in one period will become the best performers in the next period. Therefore, we thought it might be profitable to look at the biggest losers on the Nasdaq 100--in other words, the worst performers in the worst index. These are all large companies, and most of them have good business franchises and good balance sheets. It’s just that investors hate them right now....
...Sirius Satellite Radio and XM Satellite Radio Holdings, the two satellite radio companies, seem to go in and out of favor with investors quite regularly, and they are definitely out of favor right now, especially XM. Neither company is anywhere near making money, and so they are hard to value, but the product seems to be getting traction in the market place. Either stock could get back into investors’ good graces at almost any time.... Read more: HERE8/02/2006 01:27:00 PM
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