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February 22, 2006
It was sad when that great ship went down...
My children and I were treated to a stirring rendition of that old song about the sinking of the Titanic on President's Day during a visit to Boston's most excellent Museum of Science. I was reminded of the ditty just now when I saw a headline that Intel (INTC), once half of the great and powerful "Wintel" monopoly, was about to break through $20 a share -- the bad way -- on the way down. Despite BW’s rosy outlook in our issue dated January 9, investors seem to think the great unsinkable ship that Andy Grove built has hit a pretty serious iceberg. It’s down almost 20% for the year.
Shares of Intel haven't been below $20 since 2004 when that psychologically appealing level proved to be a bottom and the stock subsequently almost hit $30 before encountering turbulence again later in 2005. Interestingly, even though it feels like sentiment has turned against Intel, the stat trackers over at Bernie Schaeffer's shop note that short interest in the stock is pretty minimal, many analysts still like it, and options volume isn't signaling much pessimism. Schaeffer, in a comment last month, wrote that Wall Street’s upbeat attitude towards Intel while it remained luke warm on zooming competitor AMD (AMD) showed “when given a chance, even between two formidable companies, (the street) will almost always prefer the stumbling, bumbling giant.”
Like when the great ship went down, those following the consensus advice to overweight mega-caps in 2006 may be feeling some pain here. “Husbands and wives, little children lost their lives. It was sad when that great ship went down.”
ps How fast will Toll Brothers (TOL) prove me wrong this time? After my entry yesterday to avoid the lux homebuilder, the stock is up 5% today.
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