05/19/06

Commentary:  Are We All Corrected Yet?

Until two weeks ago, 2006 looked like 1999. Call it
déjà vu
. Now it looks like 2000. Call it déjà vu all
over again.

Maybe what's happening is just one of the
market's classic head fakes, the one in which it
buys stocks cheap before a strong move up.
Let's hope so.

But the pundits tell us that what has happened
is that prices have been "corrected".

That term always cracks me up: as if prices were
"wrong" before; as if the market had been in la-la
land but now has come to its senses; as if some
ivory-tower pundit knows better what stocks are
worth than does a market made up of millions of
real-world investors. What arrogance!

Given that the market consists of people, it's
possible that from time to time it suffers from the
human failing of overreaction, that the highs go
too high and the lows go too low.

But I wouldn't bet on it. Any time prices begin to
get out of whack, there are lots of cool heads to
take advantage of it. The market is a wonderful
instrument of self-correction.

The fact that the GTI has quickly lost 10% of its
value doesn't mean that it was wrong before. It
merely means that events of the last two weeks
have changed what stocks are worth.

Correction isn't something that takes place over
an extended period. It's what happens every
second of every day. Every new bit of information
leads to a stock market correction. It's what the
market is all about.

IMHO, the correction of which the pundits speak
is something else altogether. I suspect they're
envious of the money real-world investors make.
When prices fall, they rush to say I told you so.
Sour grapes!

Did you ever hear them refer to a rise in prices
as a correction?

The Week Day by Day:
 


Not a pretty chart. Almost all of the activity is
south of the border. The National Guard may
have to step in. Actually, things do seem to be
looking up. The bull may return next week.
There's plenty of room to grow.
The NASDAQ
is back to where it was on January 1, 1999.


The Week's Top Gainers and Losers

Gainers Losers
 AMD + 10.4%   ENER - 14.0% 
 SYNA + 4.3%   PWER - 12.3% 
 KEYW + 2.9%   ZRAN - 12.7% 
 BRCM + 2.4%   IKAN - 12.0% 
 SMI + 0.4%    EQIX - 9.7% 

Returns for the Week:

Gilder Technology Index (GTI):  - 3.8%
Nasdaq Composite Index (NSD):  - 2.2%
S&P 500 Index (S&P):  - 1.9%


Historical Returns:

Period GTI    NSD  S&P 
1997 (est'd) 21% 22% 31%
1998 (est'd) 48% 40%  27%
1999 284% 86%  20%
2000 - 44% - 39% - 10%
2001  - 43% - 21%  - 13%
2002 - 56% - 32% - 23%
2003  130% 50% 26%
2004   3% 9%    9%
2005   5%  1% 3%
2006 to date  14.8%  - 0.5% 1.5%
Avg for 9+ yrs  11.3%  5.8% 5.9%
Last 52 wks 31% 7% 7%
Since the high
of 3/06/00
- 75% - 57% - 17%
Since the low
of 10/09/02
328% 97% 63%

Comparison of Returns for GTI Stocks
By Whether or Not They Pay Dividends:

Year Do Pay
Dividends
Do Not Pay
Dividends
2004 11.6%   - 3.3%  
2005 11.1%   4.2%  
2006 to date - 0.9%   20.2%  
Avg for 2+ yrs 9.0%   8.4%  

Room to Grow:

  GTI NSD S&P
Loss from the
high to the low
94%   78%   49%  
% of the loss
recovered
21%   27%   65%  
Return needed
for a new high
294%   130%   21%  

Graph of the GTI's long recovery attempt.  

Individual Year-to-Date Returns:

ADI

- 1%

 

GLW

25%

QCOM

9%

ALTR

1%

 

IKAN

1%

S

- 3%

AMD

14%

 

INTC

- 26%

SIGM

- 18%

BRCM

18%

 

KEYW

4%

SMI

9%

BWNG

96%

 

LNOP

78%

SMTL

- 2%

CPHD

4%

 

MVIS

- 24%

SYNA

3%

ENER *

- 6%

 

NETL

16%

TSM

- 1%

EQIX

40%

 

NSM

6%

TXN

- 0%

FLEX

7%

 

PCMS *

- 25%

XLNX

8%

FNSR

118%

 

PWER

2%

ZRAN

43%

* Joined list this year (ENER 2/10, PCMS 4/7, SMTL 5/12).
  Return is while in GTI only.

 

 

The Year to Date:




From the GTI's Origin (1/1/99) to Now:




Weekly Change in the GTI, Last 52 Weeks:





Trailing 3-Month Returns, Last 52 Weeks:


 
Makeup of the GTI:

The GTI companies are those "Telecosm
Technologies" in the Gilder Technology
Report whose stock is readily available to
investors. If a company is not traded on the
NYSE, AMEX, or NASDAQ National Market,
it is not in the GTI.

There were 30 companies in the GTI this
week. They are listed, with year-to-date
returns, at the bottom of the left column.

Advances vs. Declines:

Among the GTI stocks this week, there were
6 up, 24 down, 0 unchanged.


Volatility, Trend, Recovery:

As an indication of volatility, this table shows a
verage weekly change in the GTI
each year:

 
Year Ave Wkly Change
1999 4.2%
2000 7.7%
2001 8.5%
2002 6.8%
2003 4.3%
2004 3.4%
2005 2.1%
2006 to date 2.9%

As an indication of trend, this table shows
number of up weeks for the GTI each year
:

 


Year
Number of Up Weeks
As a %
1999 39 of 52 75%
2000 24 of 52 46%
2001 22 of 52 42%
2002 19 of 52 37%
2003 31 of 53 58%
2004 28 of 52 54%
2005 26 of 52 50%
2006 to date 11 of 20 55%