Filed under: Forecasts, Google (GOOG), Apple Inc (AAPL), S and P 500, Intuitive Surgical Inc (ISRG), Recession

Thursday marked the end of the first month of the new year … and what a market. Investors have been through the proverbial ringer from January 2 right through January 31. The market ended up 200 points Thursday to wrap up the craziest January I have seen in my 30 years! So what happened and where do we go from here?

Superb growth stocks of 2006/ 2007 have seen the foam come off the top of their superb performance. Names like Intuitive Surgical (NASDAQ: ISRG), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), First Solar (NASDAQ: FSLR) and others have seen valuation reductions of up to 30-35%. Bad businesses? No. Changing business models? No. Tough environment? Yes. Think of the example of a Major League baseball team winning its division one year by garnering 96 victories, but the next year winning 93 games to capture the same division title. Bad team? No, just a different environment, and still winning its division.

The economy has taken a step back and said to these companies, “if you thought you could have 30% growth … think again, it’s going to be 25% instead this year.” The growth bar gets re-set and so do the valuations. The important point is that many terrific companies weather through these periods and when economic times improve, they go back and capture even higher valuations than before the slow down.

Continue reading The markets and the economy: Brittle or broken

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This entry was posted on Friday, February 1st, 2008 at 2:17 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.