David,
You write like a rational investor, but your logic is almost as flawed as the mindless lemmings that say "buy buy buy! at all costs right now!!! right at the top!!!"
Sure, I'd love to buy last fall. I'd also like some of that Juniper IPO allocation, but I ain't gonna get either.
But you write as if it is nearly a certainty JDSU is overvalued and will compress 20% or 50%.
No doubt it might, but it might not.
JDSU is currently trading at 100 times current 2000 estimates and 65 times 2001 estimates. Expensive.
But, how are the current estimates figured? Are they low?
What if they beat numbers and growth is accelerating?
What if the estimates don't even consider new products like the wavelocker technology?
What if the estimates don't consider the double whammy impact of new integrated products from JDS and uniphase?
Higher revenues per unit AND higher gross margins per unit.
I'm not chasing it here, since we own a decent slug. But I'm not selling it either.
If your time horizon is long term is it reckless to buy say 1/4 of your hoped for position here and hope that it goes lower?
I remember people screaming about Cisco's overvaluation every year. Like you, I do most of my buying when fear and panic are at their peak. (Last October was a joy in retrospect.) But in retrospect, you could have bought cisco every year at it's peak pe and done pretty well.
Many times, it's hard for people to buy when panic is out there. In fact, that's why I tell non-professional friends to nibble at great companies and get to know them so that they feel comfortable buying when everyone is scrambling out.
Bottom line David, I imagine you are the thread pariah, since you're trying to talk sense to a lot of cheerleaders. My sentiments are closely aligned with yours. But we have one major difference.
Maybe you should buy some of what you think is a great company now, but you should be prepared for a gift from the market....if you buy jdsu, be prepared to jump at the chance to buy it if it corrects 20% and buy more if it corrects 40%.
TD |
