Comments on Greenspan, YHOO and CSCO
9-17-07: The 60 minutes piece on Greenspan last night was quite interesting. If you did not catch the interview, we highly suggest watching it. The video clips can be found on yahoo.com or cbsnew.com. One of the many interesting thing about Greenspan is his view on our former Presidents. Interestingly, he stated Clinton was the smartest of them all and Nixon was just…well..a crook. On the economy front, Greenspan believed inflation is our biggest threat as he believed the deficit will come crashing down on us one day. We agreed with this assessment. The large deficit will lead to inflation; resulting in a period of stagnant or negative growth. Unfortunately people are not paying much attention to this, just like the subprime mess before it really became a major problem.
Yahoo! (YHOO) has been trending up in the last couple of weeks. This stock is now trading at $24 per share from a low of $22. The sentiment appears to be changing as the company appears to be taking aggressive actions to improve its position in the market place. This includes several key acquisitions in recent months (Blue Lithium and Right Media being the major two). The company is also planning to launch several key products, such as a new social networking site as reported by several major papers. We have not seen it, but it sounds interesting since YHOO can take advantage of its position as the #1 site on the Internet.
Our long view on YHOO remains bullish. A lot of what happens to this company will depend on its ability to grow its business outsides its network and how its Panama platform is doing. Now that Panama has been out for almost 3 quarters and launched throughout the world, investors are expecting to see improvements in search monetization. Bottom line; load up on this stock when you have a chance. This company will not vanish into thin air as some dot com can. Moreover, there are a lot of buyers out there that would love to buy YHOO if the company continues to falter.
Cisco (CSCO) is another tech stock we continue to like. We have written about CSCO in the past when it was around $24 per share, encouraging people to consider it. Today it is in the low $30 and should head higher as we approach the end of the year. Corporate spending remains strong and CSCO should continue to benefit from its array of product offering. Remember, CSCO is not just a router company anymore. The company’s product is much more diverse today compared to about 5 years ago. Our prediction is CSCO will be a $40 stock by the end of 2007.
However, given it is trading nears its high; we are reluctant to acquire more shares at this level as the risk of a pull back is quite high. Keep your eyes open for weakness in this stock and acquire it when the market is down. If one can get CSCO at around $28, the risk would be fairly minimal.
