- bears and the current rally;
- biotech stocks to watch; and
- Wall Street analysts' lame recommendations.
Is the Rally for Real? Posted at 3:40 p.m. EDT on Friday, July 27 Does anyone believe? I don't know many who do. I don't know many people who think Europe can do anything about its problems; they believe that, in the end, Europe will have to crash and burn. I know plenty of people who think, "Fool me once, my fault. Fool me twice, my fault. Fool me three times, my fault -- so I am not going to be fooled again." That means they are underinvested and now they are trying to figure out what they can still be in -- but they feel they have to come in. That's what you are seeing now. > > Bull or Bear? Vote in Our Poll Last weekend I was with a bunch of negative portfolio managers who were thinking they were brilliant because of how much they are short. They were gleeful. I can only wonder what they are thinking now. They have lost so much money coming in after a two-day rally off of relief in Europe that they think they will lose money coming in now, but it's only three days before the end of the month and they can't wait until the last day to do some buying. In other words, this is a classic rally based on everyone being negative, yet it is the end of the month and it sounds like the Germans recognize that things could really implode and they can't dither any more. You can put it like this: Is the rally real? To these bearish fund managers, they can't afford to wait to find out. They will fall too far behind if they don't buy something or at least cover their shorts right now.
Pay Attention to These Biotechs Posted at 11:38 a.m. EDT on Friday, July 27 You have to like the action in a troika of senior biotech stocks -- Gilead ( GILD), Amgen ( AMGN) and Celgene ( CELG) -- because it shows you these forward-looking companies are still trying to grow and aren't just sitting there, facing patent cliffs and hoping to hold on before taking a real beating.
Two Low-Priced Stocks in Contrast Posted at 11:03 a.m. EDT on Thursday, July 26 Sprint Nextel ( S) and Zynga ( ZNGA). Two stocks on two different paths, two stocks that passed each other today, one going up, and one going down. And all I can say is that there couldn't be a greater contrast. Sprint was a $2 stock that everyone gave up on, a company that looked like it was going into bankruptcy because of its massive losses and incredible need for capital. Now, on the strength of excellent execution and sheer ingenuity by one of my absolute favorite CEOs, Dan Hesse, the future for Sprint looks incredibly bright, and that ugly duckling $2 stock is now blossoming into a $3.82 stock that I think can go much, much higher, in part because it is still hated by the analysts, many of whom will now be forced to upgrade it because of the incredible ongoing operating improvement. Zynga, on the other hand, is part of an ignominious group of stocks, the second round of hyped Internet stocks, this time with the sexy social rubric attached to them, that have blown up in people's faces in a horrendous way. This $3 stock used to be at $15 and was much loved by Wall Street until today, when it reported a hideous quarter, losing 40% of its value as a slew of brokerage houses took it off their buy lists. What the heck was it doing on their buy lists anyway? And how in heck could this company, which was guiding for earnings gains of 23 cents to 29 cents, now say it could earn only 4 cents to 9 cents? We've got as little value added from the clueless Zynga analysts as we have had from the obtuse Sprint followers. Sprint is in it for the long haul, in part because it is making much more money per subscriber now that it did just a few months ago, in part because it has embraced the Apple ( AAPL) iPhone, and in part because it has the biggest bargain for its customers when it comes to data use. The rally in the common stock will help Hesse to continue to raise the capital he needs to transition his Nextel customers to plain old Sprint, because bond buyers, which had already embraced the turn, will lap up new high-yielding bonds that Hesse can issue.