Micron Technology (MU, news), "the flying pig

If I had to describe the tendency or inclination of the market so far in 2011 (as opposed to its "mood," a rather squishier concept), it would be toward speculation, as all flavors of weak, expensive, or questionable companies continue to ramp higher.

There is no better example than my well-worn barometer, Micron Technology (MU, news), "the flying pig." For those who don't know, during the late 1990s stock mania, and even for a bit of the real-estate bubble, Micron stock would soar even as the price of its major product, DRAM, was collapsing (which is what the price of dynamic random access memory has always done).



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I nicknamed Micron "the flying pig" because I thought that if a stock like that could rally (as it has at various improbable junctures), anything was possible.

Once again, Micron has taken wing -- the stock was up almost 25% before pulling back some recently -- as folks hope that DRAM prices will sprint higher one day soon. (DRAM prices have declined about 40% in recent months.)

That view is held despite the fact that the world is completely enthralled with tablets, which don't use DRAM, and everyone seems to think that PCs are dead. They aren't, and Windows 7 by Microsoft (MSFT, news) will lead to a pretty substantial refresh cycle for businesses. But that won't be enough to help Micron. (Microsoft owns MSN Money.)

To DRAM the impossible DRAM
Nonetheless, Micron's management has apparently once again convinced the dead-fish analyst community that we are going to see a huge rise in the price of DRAM, which ought to be wonderful for Micron.



Bill Fleckenstein
This is probably the most hilarious version of an old yarn that I have seen spun at least 30 times in the past 20 years. But in today's environment, it is working.

Obviously, crazy things like this happen routinely in markets, and there are countless other wild stories revolving around tablet devices, cloud computing, rare earth metals and other concepts that are in vogue right now. But to me, none represents how speculative the environment has once again become more than Micron.

For the time being, if Micron's stock price can rise -- given that the backdrop for the story has never been worse -- then anything truly is possible, and it just shows how completely futile it has been to try to be short stocks, betting they will go down.