Hi Jean-Robert, you wrote:
... I follow on a regular base a dozen of them and to be honest with you, it is hard to understand the fundamental of all of them. A strategy that I follow is to sell when I fell it's a good time and hold went I am not ready for it..
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In my opinion, in todays stock markets, more emphasis should be placed on "intuition" than on "fundamentals" in your investment strategy. Therefore, I understand and agree when you say that you rely on your feeling.
I am sure that we would get arguments from many who stake their lives on fundamentals of a company. However, my reply to them is that investing is not what it use to be. In the past, investors would rely on their brokers. The broker in turn would evaluate the company and classify it as a long-term or short-term investment. The investor would then wait months or even years for the stock to appreciate in value.
The advent of the internet, which has brought on the "on-line daytraders", has forever changed the business of investing. You can have a company which has the poorest fundamentals and yet its stock might be driven upward 50%-60%-200% by droves of on-line investors. Conversely, these same investors will pound a stock downward despite its ideal fundamentals. PEROT SYSTEMS is a perfect example of the former and GATEWAY is a good example of the latter.
I know that that preachers of Fundamentals will say that shares of a good company will rebound in time - and I agree with them. However, the time you are waiting you might be down 30%-40%-50%. And if you play with margin, the losses can be multiplied three-fold.
I guess what I'm trying to say is that fundamentals is good, but REACTING to market sentiment (gut feeling) is better.
Let me give you a personal experience. A month ago, Feb 1st, I had 1900 shares of DELL, purchased at $98 - $104 - $109. I felt DELL would continue its strong growth and combined with the imminent announcement of a stock-split I would make a nice hefty profit by end of February. An analysts report, which was recently shown to be erroneous, changed the investors' sentiment about DELL. The stock dropped from $110 to $76 within days of the report. My gut feeling was to sell and run away like many other investors. Instead, I did not sell. I stubbornly held on to my shares knowing that the hysteria would soon blow over. Fortunately, it seems the hysteria is finally over and the stock will likely return to its higher level. Unfortunately however, I faced a margin call and was forced to sell all but 500 shares. I lost a considerable chunk of my portfolio. Imagine the buying opportunity I would now have had I sold early.
Good Luck, Go CGI & Go DELL
SirVinny |
