Tech stocks may struggle in 2011

This week has been pretty brutal in regards to tech, the market leaders were slammed this week. AAPL, FFIV, GOOG, RVBD, INTC, and others may have a rough year going forward. AAPL had monster earnings this past quarter and despite that report the stock dropped 15 points off its 52 week high, of course this can be attributed to the news of Steve Jobs sudden medical leave announcement but we will have to see if investors come to their senses and buy the stock and sit on it until it hits 400 which it may by April. Now the reason I believe tech stocks will have meager earnings this year is simple, over valuation and the absence of social networking stocks.

We all know about the private placement of Facebook by Goldman Sach's which may ultimately force an ipo for the online behemoth but until then we won't have a) new breed of tech to lead us into the next decade from an investing stand point b) a sector that can ultimately spread positive earnings through out the tech industry much like how the above aforementioned have. Tech works in sync with each other much more than any other sector, the industry is so intrictly connected that if one company does sour it hurts the whole nasdaq.

Now touching on the over valuation, we have to leave established companies such as AAPL and GOOG out of this conversation but if we look at these stocks P/E ratios, just the slightest dip in expected earnings (which we saw with FFIV this past week) will crush the stock.

-FFIV p/e=58.68

-RVBD p/e=241

-AMZN p/e=73.70

-BIDU p/e=86.96

Those are just a few stocks which remind me of the over valued dotcom stocks of the late 2000s (read the intelligent investor it will blow your mind the valuation of these stocks). If these stocks report lack luster earnings they will refall I guarantee you which is exactly why I am straying away from these stocks. 2011 may prove that these stocks are over valued and a correction in tech may come a float. Touching on my earlier comment this could roll over into all of tech through out 2011, all I ask for is continued earnings at sustained growth.

AAPL/VZ and other musings for 2011

Good Morning to my 2 or 3 followers, it's been a while since I have blogged about investments but shoot nobody is perfect, how was our 2010? Well, myself and a few friends did pretty well with $HWD, $AAPL, $ECPN, $CSTR, and $CIM adding to our future retirement and palatial palaces in Bora Bora (man I wish). So I start 2011 with some great news, you will see below, it's good stuff to look forward to, I wish you all luck and in your investing triumphs so let's go for 2011!! Keep on trading, no speculating :)

Finally, after all the speculation, complaints, waiting, and wondering VZ and AAPL will be introducing the brand new Iphone to VZ. This union is a long time coming and I cannot wait for the announcement on Tuesday, Jan 11, 2011, this is going to be huge. AAPL is expected to earn some 20 Billion in revenue at the end of the 4th quarter but this estimate was before the VZ iphone. I believe for 1st qtr 2011 we could see a 6 billion dollars in revenues for AAPL, because the much anticipated Ipad 2 as well as new adopters of the iphone verizon. Now if you're asking yourself whether to invest in VZ or AAPL obviously I'd take AAPL over VZ. VZ has a p/e of 230!!! That's a ridiculious valuation as opposed to AAPL's humble 22.19 p/e ratio, still not confident? Buy some AAPL 230 call options...they're currently trading near 24, we'll see what happens on Tuesday.

What's next for AAPL? Couldn't tell you but I am so confident in this stock that I'll accumulate at 320, that's if it drops that low...

As for the rest of 2011, I really do not see a bull market compared to last year. I definately see a DOW 12000 (granted I don't really use the DOW as a measure for stock performance) how ever I believe Dow 11,000 would be a safer haven for a fundamental stock market. There are just too many pressing issues that need to be resolved. We still have a high unemployment (near 9.0%) which according to Ben Bernanke will take a couple more years to get back to sustainable levels. Couple that with an uncertain real estate outlook and rising 10-year treasury rates we are still in for slow growth for 2011-12. Lower than expected retail levels from last month show the consumer agrees as well. If you are a long term investor look to tech, cloud computing is going to be key for the future and it's happening now. I like $CA as well as $AAPL and even $ORCL, these guys are going to be the leaders in cloud computing.

I like the guy with the classes pointing in the air, so serious...