Growing-up, some of my younger years were spent on a dairy farm near Colora, Maryland. During the snowy winters, my Dad, my two-years-younger brother and I would pass the time by playinFg Monopoly. After a couple of hours, Dad usually owned most of the good properties, I was struggling to stay in the game, and my brother would land on the Boardwalk square with four hotels and be unable to pay. With him broke and out of the game, it would just be Dad and me — the outcome was inevitable.

Dad would look thoughtfully at the board, then at our cash positions, then at the bank, and finally say: “Let’s pass out the $500 bills.”

“Yaaay,” my brother and I would cry, as we went from near-broke to having wads of cash in front of us. The game could now continue for another few hours before Dad would need to infuse us with more cash again. Sometimes we made one game last the whole weekend that way.

My Dad would have been a great Fed chairman. He would have stopped this whole credit crisis cold, simply by announcing last summer that the Government was sending $100,000 to everyone with a Social Security number. Why not? The dollar is already a store of value roughly on par with Monopoly money. Of course, inflation would soar, but at least, everyone would know that it was coming, unlike the current situation where inflation is skyrocketing, but the sheeple haven’t a clue what is about to hit them.

When the Fed Chairman Bernanke was appointed, I read some of his work and proposals and said, in print, that he would not finish out his term, but would resign in disgrace. I stand by that. At the time, his favorite idea was to publish a specific inflation target, and that irked me. Inflation targeting is an academic theory that, as one would assume from the name, is a quantitative target set for inflation by an economic authority. Similar to beta and modern portfolio theory, inflation targeting will blow up in the real world. Think Long-Term Capital Management. All it does is tie the hands of the Fed, so it escaped me as to why any Fed chairman would think that it was a good idea. (I realize that lots of people outside of the Fed think that tying their hands, and preferably their whole bodies, to a stake surrounded by highly flammable material would be a great idea.)

Bernanke’s other claim to fame was his call to action for earlier, more forceful Fed intervention. His theory was that less intervention applied earlier has much more of an impact than massive intervention later. He’s probably right, but why didn’t he do it?

Now, he knows that the Fed’s real job is to follow the two-year Treasury-note yield, set by the market, and to do it while pretending to walk at the head of the parade. Besides that, all you have to do is confuse Congress now and then by using three-syllable words when you testify, and your limo and invitations to the DC party circuit are secure. It’s simple.

So how did he get so far behind the curve? That’s the real mystery. With the two-year T-note down to 1.5%, Bernanke needed to cut the Fed Funds rate in half yesterday. Instead, the $200-billion banks and Wall Street bailout that he announced — which I call the “Bear Stearns Bailout Program” — will probably lead the Fed to a 50-basis-point cut on March 18, instead of the 75-basis-point reduction rumored until now, or the 150-basis-point slash that is actually needed.

The plunge that began yesterday afternoon could be interpreted as the market worrying about the Fed “pushing on a string,” and most of the technical types are in that camp. I saw short sellers saying (or praying?) that the bottom is not yet set on this bear market, and technicians are saying a powerful upturn like Tuesday’s “ought” to be followed by several confirming rally days if there really has been a trend reversal.

But that didn’t happen. What we really saw was a probe above 1326 on the S&P 500 yesterday morning, followed by a rejection of that idea for now. That sets up two possibilities and one clear signal. First, let’s look at the latter. The clear signal, as I have been saying, is a breakout and close over 1326. You can count on the short sellers and talking heads to dismiss a breakout as just another bear market rally, but that will be the sign that the recent downtrend is over. It is very possible that when the S&P moves over 1326 and then stages a successful test of that level as support, it will never look back.

Now the first and most likely possibility is that today’s action marks one more quick test back towards 1270 that bottomed at 1282, right in the critical 1280 to 1290 range. That creates a triple bottom and enough negative sentiment to fuel a powerful slingshot rally over 1326 and on to 1440. Again, 1440 remains the crucial test for the larger decline since last October. A failure there could make for a very unpleasant summer, while vaulting over it would put the second-half rally to new highs back on the table. But we will deal with 1440 when we get to it — the big “all-clear” signal will be a close nicely over 1326. I expect that to start a very big new uptrend, leaving the bears and shortsellers crying that it ain’t fair.

The second possibility is the one that started this series of Flash Alerts warning of a potential Crash: 1270 does not hold, 1255 breaks and the S&P crashes to 1180, probably all in one day. Unless that happens very soon, the Crash has been avoided.

Until we see the actual breakout over 1326 following this triple bottom, there’s no reason to get wildly bullish. There’s also no reason quite yet to sell any protective options or the UltraShort S&P 500 ProShares (SDS) exchange-traded fund. They are insurance, after all, and they will be needed if the market can’t clear 1326. If you do own them, there will probably be a better exit price than today’s close, even if the market avoids a Crash. If you don’t own them, you should see how the S&P handles this rally after this morning’s retest towards 1270 before buying them if the market breaks. I will keep you informed as these scenarios play out in the market over the next couple weeks. I expect to send you one or two Flash Alerts about this over the next week or so, and then give market forecasting a much-needed rest until we get to 1440.

Memories Are Made Of This

A few weeks ago, I mentioned the Intel presentation on their processing breakthrough to double the capacity of phase-change memory, a technology invented by Energy Conversion Devices (ENER). I am a bit cynical about new memory technologies, because I’ve seen so many come and go, starting with bubble memories from IBM in the 1970s. The charge-coupled device that takes the picture in your digital camera started out as a new memory technology. But phase-change now looks real enough as a memory technology to spend a bit more time on it. It will be bad news for flash memory producers, but good news for Intel and great news for ENER.

First, let’s start with an overview on memory technologies, for all you tech junkies out there. As you probably already know, memories are used for different things:

• Main memory in a computer has to be cheap, hold a lot of data that can be accessed randomly and does not have to retain data after the power is turned off. The various flavors of DRAM (Dynamic Random Access Memory) suit this purpose.
• Program storage memory holds your operating system, so it has to retain data even after the device is turned off. That means it has to be non-volatile and provide random access. Desktop computers use magnetic storage — a hard disk drive — to store the operating system and a hard-wired chip to start loading the software into DRAM when the power is turned on. Consumer devices use NOR flash memory, which is non-volatile and easily accessed randomly, to store the operating system. NOR flash doesn’t drain batteries the way that electromechanical hard disk drives do, and it isn’t as susceptible to shock from being dropped. When the device is turned on, the operating system loads into random access memory, either DRAM or static random access memory (SRAM), from the NOR flash storage.
• Data Storage requires random access and non-volatile memory, so you don’t lose what you have done when the power is turned off. You or your device will save the data from RAM to either a hard disk or NAND flash memory.

User Configurations like screen brightness, TV color preferences or ring tones on a cell phone require non-volatile memory, but these change infrequently, so it does not have to be randomly accessible. NOR flash does well here.

Several memory technologies were developed to meet these varying needs in desktop and mobile computers, and consumer electronics.

Random access memories are cheap but volatile. DRAM is the cheapest, but slower and takes more power than SRAM. It also does not have a low-power, standby mode. SRAM is more expensive but faster, and can be used for low-power standby. Both types of memory have unlimited endurance and can be written to an unlimited number of times.

Flash memories are non-volatile and can be used to store whatever you want to keep when the power is shut down. NOR Flash allows for random access and therefore is used for storing program code, but it is slower and more expensive to make than NAND Flash. NAND flash is better for applications that require faster read and write speeds than NOR can provide, but until fairly recently it lacked random access capability and therefore was not suited for program storage. Some recent additions have led to “boot from NAND” capability, and since NAND is so much cheaper to produce, I think NOR is dead. That’s why Intel just got rid of their NOR operations.

Flash memory endurance is limited and the parts can wear out, but technology advances now have endurance up to a million write cycles. And software distributes the write operations and protects data from being lost in a flash memory cell that is wearing out.

Hard disk drive memory is amazingly cheap per bit, but compared with a chip is very slow and power hungry. In addition to its susceptibility to physical shock, it is not as reliable as a solid state semiconductor chip.

Computer and consumer electronics product designers mix and match these technologies to create product features and price points that will appeal to consumers. A computer has the Basic Input/Output System (BIOS) on NOR flash memory, which will load the operating system and programs from your hard disk to DRAM. The microprocessor has cache memory to speed up applications, and that is SRAM. You might plug in a USB flash memory stick with digital pictures to edit in DRAM and then store on your hard disk, or burn to a CD or DVD, each of which is a form of non-volatile and essentially non-random memory. A flash-based iPod, on the other hand, has an entirely different memory configuration.

Phase-change memory is based on a material, chalcogenide, that changes its physical state from liquid to crystal to store data. Intel should have phase-change memory chips on the market in 2010, initially to replace the NOR type of flash memory used in cell phones. Phase-change can also replace the NAND flash found in digital camera memory chips, USB sticks and other solid-state memories. Intel will pair phase-change memory with their Silverthorne processor project for portable Internet devices and handheld consumer products. Silverthorne is 25% smaller and uses 10% of the power currently used by low-power processors.

Energy Conversion Devices moved this technology into a subsidiary, Ovonyx (formerly Ovonic Memory Systems), and sold some of the equity to Intel, STMicroelectronics and other licensees. As recently as 2004, ovonic memory was only one of the many contenders for nanotechnology computer memory, even though way back in 1970 none other than Gordon Moore of Moore’s Law fame said that ovonics had great potential. But it always stayed in the “science project” category due to problems with power consumption and stability, and an alternative technology called MRAM (magnetoresistive random access memory) that uses the direction of electron spin to store information. MRAM seemed that it was the most likely contender to replace flash memory, and maybe DRAM and Static RAM, too. Something has to work soon, because by 2010 conventional flash, DRAM and static RAM (SRAM) technologies will no longer be able to scale successfully. Before that, as in next year, the speed and capacity of NAND flash memory is likely to be inadequate as a non-volatile memory for some of the new portable computing and consumer products. Companies tied to flash, like SanDisk, are making buggy whips as the automobile age begins.

Usually, existing memory technologies like DRAM and flash are sailing down the Moore’s Law curve, doubling capacity every 18 months. That makes it very hard for any new technology to catch the moving target. New technologies typically start at lower capacities and higher costs, so they have to live in niche markets until they slide down the manufacturing experience curve. Even then, the developer needs deep pockets to cross that chasm and seriously compete with the existing technologies. That’s why it is so important for us to recognize that flash memory is about to run out of technological gas and fall off the Moore’s Law curve. It opens a window for something new to come to the forefront.

All the Ovonyx licensees, including Hitachi, IBM, Infineon, Philips and Intel have made rapid strides in improving the technology, and Intel’s commitment has been crucial. Ovonic memory, MRAM and another technology called nanocrystalline memory (backed by Micron and Freescale) have emerged as the three key nanomemory technologies that could potentially dominate future memory chip technology.

While MRAM is fast and has high capacity, it is not cheap. Ovonic memory is easy and cheap to make. And with the stability and capacity issues solved, it suddenly is much more competitive with MRAM for the mobile memory market. Philips showed how to switch ovonic memory from amorphous to crystalline using only 0.7 volts, and the power consumption issue went away. Intel, which wasted quite a bit of time backing a losing technology called polymer memory, is now committed to ovonic memory and will sample products this year. That means all their competitors will have to take it seriously.

The triumph of ovonic memory is not a sure thing, but it is looking more and more likely. Samsung, the market leader in DRAM and flash memory, has chosen ovonics as their most likely replacement technology and will introduce products later this year. The key to ovonic memory becoming dominant or just important will be if it can become a hard disk drive replacement and bump expensive flash memory out of that market. The hard drive market is huge in terms of bits of storage. Ovonic memory does not have to be cheaper per bit than hard drives; it just has to be cheap enough at the typical hard drive capacity that is used in an MP3 player or a laptop. Laptops that need huge amounts of storage, such as those for product engineers, will stick with hard drives. But if the “cheap enough” number is, say, $35, and that buys enough storage using ovonic memory, there’s no reason to put in a hard drive with twice the storage. The whole laptop can be designed differently if the hard drive is not there. On the other hand, the video server that you will have in your home in seven to 10 years with all the high-definition movies on it will still use a gigantic hard drive for storage. Solid-state memory would be too expensive. Other technologies will still live on, but only in other specialized applications.

For example, Metaram, a Silicon Valley startup headed by Fred Weber, the former Chief Technology Officer at Advanced Micro Devices, has designed a chip that sits in front of ordinary DRAM and manages the read/write process. It substantially accelerates DRAM while allowing for 75% smaller physical memories. It can cut the cost of a supercomputer by up to 90%. It has immediate application in the large database servers, and eventually could enable a personal supercomputer in your home.

We are well-positioned for the triumph of ovonic memory through Energy Conversion Devices, where literally none of the present value of the company comes from their ownership of Ovonyx. When the company announced December second-quarter results in February, they broke a four-quarter streak of disappointing Wall Street. Revenues hit $56.4 million, up 20% from the first quarter and up a whopping 146% from the prior year. United Solar accounted for 92% of revenues, and solar production grew 50%. They lost 14 cents a share, including about 12 cents for one-time severance and preproduction costs, less than the 19-cent loss in the first quarter or the 37-cent loss last year. The new and very effective management team said (again) that they will show sustainable profitability in the June fourth quarter, because sales are running ahead of even their increased production.

They raised the lower end of their guidance for the year and are now looking for $235 million to $245 million in sales, instead of $220 million to $245 million. They also raised gross margin guidance to 23% to 25%, based on their cost-cutting program and increasing production at the new Greenville, Michigan, plant, which only opened last November.

Incidentally, General Motors said that it will put lithium-ion batteries in its hybrid cars and trucks in 2010. They have three times the power of the current NiMH (nickel-metal-hydride) batteries made for them by Cobasys, the joint venture between Energy Conversion Devices and Chevron. The contract for developing these batteries was awarded to Cobasys in January, which will work with A123 Systems, the partner I previously told you about. Toyota and Daimler (Mercedes) are going the same route, and everyone else will follow.

The stock bumped up 11% on the “sustained profitability” forecast, but still is dirt cheap as the thin-film solar laminates leader, unaffected by the polysilicon shortage because their process does not use it. Buy ENER while it is under my $30 limit for my $55 target.

Biotech MegaShift

Amgen (AMGN) got a unanimous vote yes yesterday from the Oncologic Drugs Advisory Committee to recommend approval of Nplate, as I predicted. Even Dr. Padzur agreed. The FDA is due to approve in May.

At today’s more important hearing on Aranesp, I thought the most likely outcome was restriction for use of the drug only in breast cancer, with a minimal chance that the drugs would be restricted for all cancers, and maybe a 40% chance they would walk away scott-free. Indeed, they won a 1- to-1 vote against banning Epogen for cancer treatment. They won an 8-to-6 vote saying Aranesp should not be limited to small-cell lung cancer. Then, as I expected, the panel by a 9-to-5 vote said that Aranesp should not be used for metastatic breast cancer, but they added head and neck cancer, which I didn’t expect. This relatively trivial restriction won’t have any significant additional impact on Aranesp sales.

The FDA should confirm the panel’s advice in 30 to 45 days, bringing this whole episode to a close with no additional damage. The stock was up $2.19 today, or almost 5%.

Amgen now has the formal approval of Nplate ahead of them, followed by positive late-stage data on their osteoporosis drug, with no more negatives in sight. The stock should move up dramatically no matter what the market does, to take its place with Genentech as a biotech industry leader. Genentech may increase its guidance tomorrow, fueling a relief rally in biotech. Of course, a strong market will make the process go quicker. As I’ve said before, if I was recommending a LEAP option today, I’d pick one closer to the current price of the stock, but I’ll continue to recommend buying the Amgen January 2009 $70 LEAP call (VAMAN) all the way up to $12.50 for as $25 target, which assumes AMGN hits $95 a share before the LEAP expires.

Dendreon (DNDN) said that the FDA has agreed to accelerate final review of Provenge by almost a year, and the interim peek is still planned for the second half of this year. They completed enrollment in October, so it is just a question of following up long enough to get statistical significance. On the conference call, management said that they were able to increase the power of the interim analysis while using 305 patients instead of 360 for the final analysis, which accelerated the timeline to approval.

DNDN has a new molecule targeting cancers and Benign Prostatic Hyperplasia that should go into human trials this year. They’ll present animal data at the American Urological Association meeting in May.

The company announced earnings this morning. They lost 32 cents a share for the quarter and burned $82.6 million in cash for the year, about the same as in 2006. They finished the year with $120.6 million in cash. Buy DNDN up to $8 for my $40 target after Provenge is approved, either in late 2008 after the interim peek or early in 2010 after the now-accelerated final data is submitted.

Geron (GERN) had two more important human embryonic stem cell patents upheld after a U.S. Patent Office re-examination. Geron holds a broad portfolio of in-licensed patents. Plus, it owns stem cell-related patent portfolio of 36 issued or allowed U.S. patents, 69 patents granted or accepted in other countries and more than 230 applications pending worldwide. GERN is a buy up to $9 for an $18 trading target, and higher prices in the longer term.

Isolagen (ILE) has fallen below 50 cents a share, and Dave wrote: “I just read the Isolagen 2007 annual report filed 03/07/08 form 10K and found it very, very negative, showing possible bankruptcy and denial of BLE license from FDA on patients dropping out of phase trial and law suits filed against directors for false representation.”

Another subscriber, Russell, asked for the details on why Isolagen failed the trial and why the new trial is likely to be successful, and asked if there are financial issues here.

Just to recap, Isolagen has completed dosing in both the Phase III nasolabial wrinkles trial and the Phase II full-face trial. In both cases, patients are in the six-month follow-up period, and when that is over, we will see the data. The Phase III trial for acne scars is still accruing patients.

The last wrinkles trial was badly designed and not conclusive. The new trial qualified for a Special Protocol Assessment with the FDA, which means if they hit statistical significance, they get approval.

The stock came down mostly on the appointment of the Chief Financial Officer as CEO. First, he lives in Ireland, not Exton, Pennsylvania. Second, the appointment could be read as Isolagen needing financial talent, not medical talent, to get to the next step. I think that’s true. They finished 2007 with $17 million in cash, enough to carry them through September, and a large negative book value. They certainly don’t want to sell stock at the current low levels, so they need to sell their Swiss office property and partner one or more programs. Longer term, they have $90 million in convertible debt due on November 1, 2009, that they need to take care of.

So the situation is that if the Phase III wrinkle program fails, the company will probably be sold for pennies. But I believe the program will succeed, in part because the therapy works and was already on the market in the U.K. It’s always possible for a U.S. clinical trial of a process approved in Europe could fail, just as Isolagen’s last trial did, but that is not the way this one is shaping up.

But the risk factors are high, because in the third quarter they will announce the Phase III wrinkle data and run out of money. With good data, the stock will shoot skyward, and they’ll be able to do a quick private placement (they already have a shelf registration effective) at much better prices. That’s exactly what I think will happen. Just to reflect the current market, I am reducing my buy limit to $1 but leaving my target price at $9, which assumes the trial works. ILE remains a Top Buy, although a very speculative situation.

Rochester Medical (ROCM) drew questions from Charles and John: “With all that cash why doesn’t management buy a few million shares to stabilize their stock and stop the bleeding before they lose all these new stockholders. Or don’t they care? If they don’t do something positive, it’s Tankville.”

John, Rochester has a much higher return-on-investment opportunity, and that is dramatically expanding sales of their anti-infective urinary catheters. I know the lower stock price is painful, but it is based on higher marketing spending depressing current earnings. We just can’t give in to Wall Street’s incredibly short-term focus, when everything is going right at the company and they are moving to take advantage of the opportunity that the FDA has handed them. Hospitals right now are convening committees to see how to reduce hospital-caused infections, and ROCM needs to be in that dialog.

A settlement with Covidien will go a long way towards getting the stock price back to where it belongs. In the meantime, ROCM at $10.38 (up $1.02 today) is a gift. Buy ROCM up to $20 for my $40 target.

Content on Demand

EMC (EMC) will benefit as business capital spending holds up for virtualization software sold by its 85%-owned former subsidiary, VMware (VMW). Spending will hold up because virtualization saves money, with a high return on investment. VMware has over 55% of the market for this software, with Microsoft and Citrix Systems about tied for a distant second with 20% each. IBM has 12% and Oracle 7%.

Furthermore, surveys show that VMware and IBM are the only two suppliers with satisfied customers. Citrix is in third place with less than a third of their customers happy, and Microsoft is at the bottom with about 29% customer satisfaction. That’s pathetic, and word travels fast among Information Technology (IT) customers. So it isn’t surprising that going forward, a recent survey showed three-quarters of all those intending to buy virtualization software will buy VMware. That’s very good news for EMC. Buy the EMC January 2010 $15 LEAP call option (WUEAC) up to $5 for an $11 target.

Harmonic (HLIT) has been weak, and I can find no reason why. Competitor Arris had a bad quarter, but that was because a competitor took market share away from them in a product that Harmonic does not even make. Comcast is rolling out its DOCSIS 3.0 high-speed Internet in the second half of the year, and Arris said that Comcast might have less demand for some Arris products. But Harmonic is a supplier to the DOCSIS 3.0 rollout, so this is good news for us.

Demand remains very strong for video infrastructure equipment, with video now more than half of Internet traffic. You may have seen that Google is investing in a 6,200-mile transpacific fiber-optic cable consortium to make sure there is enough capacity. Shades of Global Crossing! If only they could have held on for another five years, their vision of huge undersea cable networks to handle all the Internet traffic would have come to fruition.

At the recent Merriman Curhan Ford conference, Harmonic management said that demand remains strong, and in 2008 the company expects to operate above its goal of 15% operating profit. Take advantage of this weakness to buy HLIT up to $12 for my $16 target. I am making HLIT a Top Buy.

Security MegaShift

SiRF Technology (SIRF) drew two subscriber questions from Larry: “Given the legal sharks are circling, do you think of the case holds any merit? Given your experience, how long will these types of actions depress a stock’s price?”

No the cases have no merit. The plaintiff’s bar is looking to settle with SIRF’s insurance company. There will be a long fight among the lawyers, and then either the case will be thrown out or the insurance company will settle. These cases don’t depress stock prices at all. Now that Bill Lerach is in jail, my hope is that legislation will be passed exempting the company and its shareholders from any damage awards, and make the plaintiff’s bar sue the individual managers that caused a problem, if any. SIRF is a great buy up to $12, and I still think my $28 target will be hit after the combined GPS/processor chips are introduced.

WiMAX MegaShift

Alvarion (ALVR) reported an excellent December fourth quarter and is looking for strong revenue growth in 2008. But the weakness of the U.S. dollar versus the Israeli shekel led them to forecast March-quarter earnings of breakeven to three cents a share, below the five-cent consensus estimate, and that was the bulk of the reason why the stock declined. Another factor was AT&T saying that they would go ahead with investments in LTE (Long Term Evolution), an inferior cellular technology that will yet again keep U.S. carriers out of step with the rest of the world. Verizon probably will play the same game, leaving Sprint Nextel, Clearwire and the rest of the world to deploy WiMAX. It is the accelerating worldwide adoption of WiMAX that lets Alvarion management reaffirm their revenue guidance for $275 million to $300 million this yearup as much as 25% even as their legacy products decline.

For the December quarter, sales rose 32% to $66.3 million, above the high end of their guidance. That included record WiMAX revenues of $36.3 million, and the company said that the various trials they are in are getting bigger and more complicated. In addition, there are numerous spectrum auctions and awards going on all over the world — so actual commercial activity is accelerating. For the year, the company had record revenues of $236.6 million, up 30%; record WiMAX revenues of $124 million, up 74%; and record WiMAX shipments of $138 million, up 84%. I expect high growth rates to continue for several years. That’s why when Wall Street knocks the stock down because of quarterly results that will be reported six weeks from now will be impacted by the weak dollar, I tend to look at how much money we’ll make by buying the stock at these levels for a multi-year investment and get really excited. Of course, the company was profitable for the year, with 14 cents a share pro forma and six cents on a GAAP basis.

There is nothing wrong with the company or the WiMAX market, and ALVR remains a Top Buy all the way up to $11, a double from here, for my $18 target, a triple from here.

Death of the Dollar

Microsoft was fined $1.35 billion by the European Competition Commission, and they have to pay it in 90 days. But the Commission does not accept dollars — Mr. Softee has to pay in euros. I guess someone is agonizing about what day to pay.

With the dollar trading at its weakest level in 30 years, below 100 yen last night, gold over $1,000 and oil over $110 a barrel, one wonders how much worse Bernanke can make it. The answer is a lot, but probably not right now. I expect the dollar to stabilize against the euro for the rest of the year, although it will gradually lose more ground to the yen. I also think that gold will consolidate its recent gains, which in the case of that market means a year of volatile trading between $700 and $1000 an ounce, with little net progress. I also expect oil to stabilize in the $80 to $110 range, centered on $90 or so.

After the presidential election and the typical six-month honeymoon, assuming the democrats take control of Congress and the presidency, the bear market in the dollar should resume big time. As you know, after April 2009 I am expecting a big bear market, a big recession and a final resolution of the dollar’s future.

But there’s a lot of money to be made between now and then… not buying gold, oil or euros… but in the MegaShift stocks. Since last October, small-capitalization high-growth stocks have fallen 30% to 50%. That has brought their price/earnings and price/enterprise value ratios to historically low levels, a couple of standard deviations below normal. In the past, that’s been a buying opportunity that leads to well-above-average returns over the subsequent period, in this case to April 2009. It takes courage to take advantage of it, but remember that the headlines report what has happened, and the stock market only cares about what is coming.

 Print This Post