22 October 12 17:41–The opening of the reporting season on the wrong foot by technology gorillas like IBM, Intel (INTC), Microsoft (MSFT) and Google (GOOG) was to some degree a trigger for the drop of more than 2% in the Nasdaq index on Friday, but it was not the main cause. In my view, CNBC’s coverage on Friday of the 25th anniversary of the crash of October 1987 was so scary that no-one wanted to go into the weekend break with stocks in his portfolio. At that time, I was taking my first steps on Wall Street, and I recall saying to myself on October 19, 1987, as the Dow Jones slid 22%, that this industry is being wiped out, and I had better think of another profession. I drew two important lessons from the traumas of 1987. The first is that the astonishing recovery of stock prices is no less impressive than the crash; the second is that it will never happen that the expert who predicted one great crash will manage to predict the next one, so there is no point in listening to him or her.
Has anyone heard the name Elaine Garzarelli? She was the only Wall Street expert who truly predicted the crash of 1987, and since then she has not scored another hit, and has dropped out of sight.
This is why, since 2008, the year in which Nouriel Roubini made his name by predicting the crisis, I haven’t been getting excited over his dark forecasts, uttered every other day. The same applies to Jim Rogers, who for years has been prophesying catastrophes that don’t happen, and bond king Bill Gross, who, when the Dow Jones was at about 8,000 came out with an unequivocal declaration that it was on its way to 5,000. In fact, it soared to 14,000.
Among the companies that did not disappoint last week, SanDisk Corporation (Nasdaq:SNDK) stood out, with sales a little higher than the estimates, but a bottom line that was much better than expected, both in the results and in the guidance, and, had it not been for Friday’s dip, its share price would have responded with a rise of at least 10%. Sales to commercial networks, to OEM customers including Apple (AAPL), and the recovery in SSD sales, led to substantial growth in comparison with the second quarter, which was very weak. This trend will accelerate in the fourth quarter…Read More>>