Sunday, November 15, 2009

Research In Slower Motion

One of the rules of successful investing is to not get distracted by the noise served up on a daily basis by the business media. When we focus on stuff like auto sales, housing starts, consumer spending, Chinese growth and forecasts by TV personalities like Dr. Doom and the Raging Bull we overlook what the markets are telling us

Did anyone out there notice the new 52-week high posted last Friday by the Technology Select Sector SPDR Fund (NYSE-XLK). Yes – the tech stocks are attracting money – we seem to have another technology boom - probably driven by the global economy.

The Canadian peer - the TSX listed Information Technology Index (XIT) is lagging because if the heavy-weight component Research In Motion problems. There is growing concern about increasing Smartphone competition and the potential for longer-term declining ASPs (average selling prices) and profit margins.

The reality is RIM, the corporation is going through transition from a youthful risky enterprise into a middle age cash cow - basically a fourth Elliott Wave – a long period of transition - unless RIM an do an Apple and re-invent itself. By the way, Elliott fourth wave periods are confirmed when the original innovators are distracted by self-serving irrelevant hobbies such as collecting art, professional sport franchises and kite surfing.

1 comment:

Anonymous said...

I guess we must no be surprised that the bay street folks have thought up another way to get working people to part with their money. I'm amazed that the government let them sell double leveraged ETF's to people.