First of all, hellooooooooo thread!! Over a hundred posts today alone, and it's still not even 8:00 p.m. here on the left coast. I note we remain on the Hot Subject list; our detractors will claim that our posts are all over the map, sound and fury, signifying little or nothing. That may be so, but I'm learning from almost everyone, which fact may simply reveal my own lack of knowledge, or thirst for knowledge (they might be the same).
As for the historical significance of 1830, all I can recall is that Old Hickory was President, and he was probably orchestrating the Trail of Tears for the Cherokee Nation. Not the Nation's brightest or finest moment. Then again, Naz 1830, at least on the way down, is a sort of trail of tears for those New Paradigm types from February 2000.
I think there is a fundamental difference between legging into selected techs now on a trading basis or even taking a fundamental position in some stocks and those numbskulls who hopped on the New Paradigm Train in 1999-2000 and got their fingers burnt. Trading is a no brainer for the nimble, since there's a whole lotta volatily. Buying here, with the intention to hold is defensible, also, in my most humble opinion. For example, take a stock like SUNW, selling now for about $18. If you're willing to hold a portion of your portfolio in technology at a fair price, then what are the probabilities for Sun to sell at a range of prices in the next 12 months: $6, 12, 18, 24, 30, 36 and 40? You take those probabilities and map them out. Let's say you think there's only a very small chance that Sun will trade down to and stay at $6, so you assign it a percentage chance of happening, say, 2%, but you think there's a 15% chance that Sun will fall to $12 and stay below that. Say there's a 25% chance that Sun refuses to rise above $18 for the rest of the year.
A prudent investor will multiply the prices times their percentage probabilities and come up with a total "probabilistic fair value" for SUNW today. When I did it, just scratching around on a piece of paper, I found that I valued SUNW at about $28. That was a conservative guess, I thought. You can make your own calculations, of course, for each and every stock. Now, obviously, those who viewed techs dimly a year ago might have made the same calculation and said, SUNW at $64.66 is a joke, it's probably worth no more than $28. Lo and behold, they would have been right. But now when SUNW is selling at $18 it's POSSIBLE to value it at $28, and if risking $18 to make $28 within the next 12 months seems like a fair proposition, then maybe there's a place for Sun in your portfolio.
Of course, the Market always overdoes it on the downside as well, so it is more than likely that you'll be able to pick up some cheaper Sun ($16 might be a nice entry point, followed by purchases at $13, $11, etc.) if things get extremely hairy. If things only get rather hirsute, then the $16 purchase may be the only slice you buy.
Just thinking out loud here.
Btw, I still think NBR is a great company and won't sell my shares below $75 (and plan to write OTM covered calls all the way there). Anyone who feels like it should join me (and Kollmnh, he's into NBR in a big way), and $54 is a very nice entry point ($49 is even better, of course).
Okay, I'll go quietly now. |
