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Mark, I think all we can read into the low volume is that it is summer
and the top traders are out of town. They are always out to lunch.
-G- I don't watch volume or any of that technical stuff. What I do
is use a quantitative model to determine the fair value for a stock,
and when it goes below that, I start buying. And when it goes above
that, I buy puts. The model is nothing to brag about. The key is
plugging in the right numbers. For example, using my model with the
average analyst's eps estimates for Micron last year would have shown
that that stock should be in triple digits. However, I had a better
idea about the earnings than the analysts did and plugged reality into
the model and MU is still way overpriced today. So, the key isn't
the model
you use, it is the input factors, which include interest rates and the
eps growth of some index average. Of course, then you deal with
something like biotech and throw the model out the window. There,
every picture tells a story and the key is to get a clear picture. And
it is almost a crapshoot, so you diversify like crazy. I like Dell
for puts. I think they are one of the stronger players in the pc
business, but I think they will all get killed, and Dell is overpriced.
I prefer Gateway and Compaq, especially at their new high prices.
There are just too many players in that game. Peoplesoft has been
one of my least successful put stocks over the past 3 years or so.
Every time I think they are way overvalued, some really dumb company
tries to buy them out. I think it's overpriced, but I don't have a
lot of credibility on this one. I don't know MCAF. MB |
