Gus,
Thank you for your good-natured reply to my (slightly) barbed post.
I'm a mid-boomer, I guess.
Actually, there is another thing you could do to protect your profit in ZITL, although it involves the "S"-word. If you are reluctant to sell because you think it'll be at higher price in a year or whatever you could short-against-the-box which will lock you in at the current price. You can ask your broker about how that works. I'm no expert but I've done it and you can e-mail me (address in my profile) if you want to chat more about it.
You ask a good question about ZITL's valuation. In November and more so at year-end I think the price was inflated from a short squeeze which may have resulted from many shorts looking to cover and book the tax loss in 1996, and to a lesser extent momentum players. There was also the Soros rumor. Anyway my point is that ZITL may never have been "really" worth what it sold for at that time. This kind of argument gets a bit sticky since in a strict sense the value of any commodity is determined by whatever someone is willing to pay for it. Generally, as investors we think that we know better than the market and can identify assets which are under or over-valued. The market seems to be saying ZITL is worth 30-ish as it's held there for a while. Of course, I still think it's overvalued--but we've hashed that around enough for several lifetimes already.
Let me offer some further advice, as I infer you're relatively young, you've got some time to allow stocks to appreciate. As I'm not *that* old I feel that way. My approach is mainly buy and hold. Mostly long. I've been trying to do some trading but my timing isn't yet good enough. The buy and hold strategy is nicely explained (along with many other things) in Peter Lynch's book "One Up On Wall Street." It is my favorite book on investing and I always recommend it to people. One of his points is how, over 3-5 years, stocks in many companies, some large mature, can appreciate 10X or more. Often, this beats swinging for the fences with speculative companies.
Gus, a friend just came over, we're going to watch "The Godfather Part II" (one of my all-time favorites), and I have to put my son to bed. Catch you later.
Regards,
Lyle |
