At least at this juncture, yes I think we are at the last leg of bull cycle (not sure of the duration yet), and yes I am still cautiously optimistic on tech cycle (look at Nasdaq). My gut feel (again base on another set of indicators) is that tech would emerge as one of the best performing sectors in time to come. I have this view even if general bull market is at or near its last leg. Again, please note that there are different segments in the whole of tech sector. For some of the stocks that you mentioned, they are in the semicon sphere, hence you need to monitor the semicon book to bill ratio closely. My feeling is that it is at the bottom or very near its bottom but has yet to turn up yet. It was last reported as 0.81 on 18 Oct and watch out for the next release on 15 of November 2007. The other chart which you need to monitor is the SOXX index which I have shared in my blogs before. You see, as far as semicon stocks are concerned, they are trying to reach a bottom. In short, for those who buy these stocks now are like trying to bottom pick. A surer way is to buy them when you have one or two uptick in the book to bill ratio. However, if you already owned them, then it is wise to hold on to them for the next few months and continue to monitor the key indicators.

I shared Jacob’s view that we need to keep monitoring for factors that might short-circuit the markets (refer to my blogs for the past few days). I mentioned about high crude oil price when it was first crossed US$80 per barrel. Anyway, as explained in my earlier blogs, should the Fed continue to cut interest rates on 31 Oct, the scenarios that I described before would play out once again. In short, this is the best way to create asset bubbles (in all commodities such as crude oil, gold and so on, stock markets in emerging markets, …etc). Of course, US$ will be devalue at a faster rate. All these will conitnue for sometimes until some thing happens (e.g. US or China policy changes or crude reaches US$120 per barrel in short time, more sub-prime loan surprices etc) that will burst the bubble. Before that happens, we should be well placed to enjoy this wild ride. In all bull cycles, the last leg could prove to be very powerful and bring stock prices to their rediculous levels! The highest PER in the past few bull cycles reaches 100 times (yes, this was during the tech euphoria in 2000). On the whole, a super bull market could see the PER reaches 60-70 times which is where China market is right now. Will it reach 80 or even 90 to 100 times? Not impossible, as this is a classic liquidity driven bull run! On the flip side, a correction of a bull market can be any where from 20% to as high as 70%. In the history, we have one correction at close to 90% (yes, during the great depression in the 1929-1930).

Last but not least, always watch out for danger even though you are bullish. All views are not cast in stone, they change in line with the every changing environment. Cheers!

Disclaimer: Invest at your own risk! Please read the full disclaimer at the bottome of my website. Thanks

Thanks for your informative and interesting blog.

“All we need to do now is to sit back and relax and enjoy the rally being played out in the markets in the next two months. This could well be the last leg of the bull run started since early 2003! Cheers! ”

Referring to what you’ve mentioned above, are you saying that we should gradually be selling off whatever shares that we are holding during the coming rally over the next two months?

How about the coming Tech cycle that you’ve mentioned some time ago? I still have quite a substantiate holdings in Tech stocks like Chartered Semicon, Datacraft, DMX, ASTI, etc. and they are still in the red. Should I also sell them off during the rally (to cut loss) or should I sit out and wait for the coming Tech cycle (if any)?

Pls. advise. Thanks in advance for your time and advice.

Cheers,
Lynn