Friday, 14 March 2003  8:30 am
All week I have harping on the overstated gloom hanging over the tech stocks and the stock markets in general, and the ubiquitous explanation that it is all the direct result of "geopolitical uncertainties".  Yesterday my thesis that this was all bunk was proven correct.  On no change at all in the "geopolitical uncertainties", we experienced significant rallies in multiple stock markets, here and abroad.  In a single session, the NASDAQ wiped out its entire 2003 loss. The Semiconductor Index (SOX) is now up 7% for 2003.  Overseas, the Amsterdam stock market moved up 8%, with other European markets moving up more than 4%.

What caused the rally?  Perhaps is was the ending of a huge forced selling program by a weak European bank or insurance company.  Perhaps it was the unwinding of Treasuries-linked hedges used by Fanny Mae and her siblings to hedge the prepayment of mortgages.  Perhaps the short sellers got caught in a classic short squeeze.  Perhaps some influential market timers called the bottom of the bear market and urged their followers to go 100% long.  Perhaps it was Intel's release of its new Centrino platform and its enthusiastic endorsement of Wi-Fi. In actuality, it was all of these things combined, plus hundreds or thousands of other factors.  But one thing is certain: it was not due to any news on the geopolitical front.

As I stated on Monday in the face of a stream of economic bad news and a stock market that  seemed to be able to do nothing but go down:

"Despite the faltering global recovery, oil prices, consumer and business confidence, and geopolitical uncertainty, my guess is that the wringer-cycle probably is mostly over, and that we will start to emerge from the woods in the next few quarters with the US economy pulling the train, as usual.  As opposed to three years ago today, when tech stocks were priced for everything going right, tech stocks today are priced for everything going wrong, short of the end of the world."

Yesterday it became clear that the end of the world is not yet at hand.  Some nimble investors who had not submitted to the gloom and "geopolitical uncertainties" explanations even made some money.