Tom Dorsey Q&A Part 5. Wednesday, Feb 18
Q) I have EVI May 75's that I have averaged down on for 2 months. My cost basis is 1.47 and they are bid 3/16 now. Should I hold for a possible surge up or should I sell into strength in the next rally and take what I can get out of the investment?
A) No fix Glen. Simply light a candle each night. In the future never average down in an option. Always plan to hold the option to expiration as this will give you one or two great rides a year that more than make up form those that expire. Hold this to expiration and see if they call your name in the lottery.
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Q) What do you think the outlook for the networking stocks going out 2-5 years and any specific technology/stocks that he feels may do very well. I am interested peripherally in the voice recognition and the storage aspect of same.
A) We don't look out that far. We only look out as far as our headlights will allow. This question is best answered by fundamentals.
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Q) I'm long on three small tech stocks: PTEK, MRVC and PCMS. I've been trying to decide whether to sell into strength, assuming we ever have any, or to buy more on dips or other opportunities. What does the
crystal P&F ball see as support and buying targets on these little darlings?
A) PTEK and MRVC are both trading at or below their bearish resistance line. We are always cautious and make sure our stops are in place under these conditions. Both have relative strengths that have reversed down.
PTEK may have a stop to low for you at 20 decide your risk level. MRVC might break a spread double top at 31 which would also put it above the bearish resistance line. Stop of 20 here too.
PCMS has pulled right back to support. You could buy more here with a stop of 16.5.
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Q) What is your favorite stock or stocks right now?
A) Campbell's Soup, McDonalds, Proctor & Gamble, Clorox, Fanny Mae, Freddy Mac., tons of others, large cap.
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Q) Hi Tom, Jan here, question from my Dad. He wants to know how he can make 300,000 dollars by next month. He did, he asked that. Big trip to Reno planned I guess. Should he get it in black jack or in the market?
:-)
A) Buy 20 contracts of March Soy Beans. (Very risky)
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Q) How do you feel about Yuri? Do they get bought? Will they make it in the face of stiff competition from larger companies bringing newer and more cost effective product to the ATM CPE market.
A) We don't think about things like that. We leave the heavy thinking to the CFA's who are trained in such things. Best to get a report from a brokerage firm that follows it and you can be sure the fundamental analyst has kicked all the tires. In the end watch the point & figure
chart.
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Q) How about ASND. Do they turn the ship around by focusing on another market segment in which Cisco dominates - namely the ATM/Frame market. ASND says they're shifting away from their traditional markets - the RAS market and that they expect to get well in the ATM space... can they truly make a go of this?
A) ASND has made the turn technically. Fundamentally, I leave it to the CFA'S.
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Q) Cisco... O.K. what about Cisco. Are they fully valued given John Chambers assertion that CSCO is a $20B in 2000. Or better yet... does Tom think Cisco is a $20B company by 2000.
A) Don't know about associations of people or 20B by 2000. But stock looks good and I expect higher prices if that is what you are interested in. |
