Closing Out the ‘Worst Quarter Since 2008;’ Where Do We Go from Here?

On September 30, the day the second quarter came to an end, the Dow dropped another 240 points to 10,913. According to CNBC and Standard & Poors, we’ve just finished the worst quarter since 2008. The weekend newspapers were full of one dire analysis after another suggesting that the job situation was the worst since 1982, when we were in a severe recession (NY Times). New York Times columnist Floyd Norris quoted President Franklin D. Roosevelt, speaking during the depths of the Great Depression about the pessimistic mood of those days, who said that “the only thing we have to fear is fear itself.” October, often a risky month for stocks, is upon us. Furthermore, CNBC regular Hugh Johnson, of Hugh Johnson Advisors, rattled off some statistics this week and suggested we’ve been in a bear market since last April.

Well, we’ve been taking a longer view. We’re not taking back our headline from earlier this month: “The Bulls Will Rule September,” although many investors in company’s like Netflix (down more than 50 percent in September alone) and solar panel manufacturers may be inclined to disagree. We’re sticking with the optimism of Otis T. Bradley of ICM Capital Markets who also takes the long view. We are now suggesting the bulls will rule the fourth quarter.

Like Bradley, we believe we are currently in the midst of a correction (perhaps even what he suggests may be a “vicious correction”) that is a necessary part of any bull market and a pause that allows the market “to rejuvenate, gaining strength for the next foray forward.” We’re in a “Worldwide Bull Market…that is becoming the Greatest Bull Market of All Time,” according to Bradley and even a 3,000 point correction, if it comes to that, is not going to put him off.

Remember that fourth quarters are traditionally positive, and the fall has typically been a good time for technology companies. A big part of Bradley’s optimism over the long term is his belief that we are in the “Golden Age of High Technology,” an era that is so rapidly expanding and fast-moving that no one can predict what the technology world will accomplish in the next 3-5 years. As an example he suggests we look back 3-5 years–could you have predicted what would occur today?

So, just for some new stocks to watch, let’s take a random look at a few smallcaps held by the Thomas Weisel Partners Asset Management LLC fund, which invests heavily in smallcaps in  technology and healthcare as well as the consumer and service sectors. We can check back later in the fourth quarter and see how they have fared.

Atlanta-based Internap Network Services (Nasdaq: INAP, http://www.internap.com/), which provides internet services to help with their cloud-based applications, has a $240 million market cap. The fund reportedly cut back its investment in INAP during the second quarter. The stock closed Oct. 3 at $4.78, down 16 cents on the day. Its 52-week high was $8.56 from back in early May.

Mountain View, CA-based Map Pharmaceuticals (Nasdaq: MAPP, http://www.mappharma.com) develops drugs for a variety of ailments, including diabetes, asthma and migraines, and is a big part of the fund’s healthcare holdings. The stock closed at $13.76 Oct. 3, down 86 cents on the day. It was down as low as $11.17 back in early August.

Mountain View, CA-based Hansen Medical (Nasdaq: HNSN, http://www.hansenmedical.com) develops robotics for controlling catheters and medical devices and is another big part of the fund. The stock broke $5 in late July but closed Oct. 3 at $3.05, down 25 cents for the day.

Wilmington, NC-based TranS1 Inc. (Nasdaq: TSON, http://www.trans1.com) develops minimally invasive instruments and transplants for degenerative disc diseases. The stock closed Oct. 3 at $2.73, down 27 cents. Its 52-week range is $1.76-$5.42. It is another stock in which the Weisel fund has a large position.

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4 thoughts on “Closing Out the ‘Worst Quarter Since 2008;’ Where Do We Go from Here?

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