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Technology Stocks : All About Sun Microsystems
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To: Alex Chun who wrote (24339)12/9/1999 3:45:00 AM
From: nihil   of 64865
 
A dollar is worth what people collectively believe it to be worth. So too with a share of
stock?

Thoughtful post, but tech leaders are clearly in a bubble. This is a blowoff. Several leaders (CSCO, SUNW, QCOM) are going vertical and the little flashy stocks and internuts are going wild. Greed is in the saddle and riding hard. Few puts are sold in relation to calls. Little profit is being taken. It hurts so bad when you sell and the thing keeps going up.
Price formation in bubble is easy. The train is leaving the station. You can't afford to miss a single day. Every stock I was watching went up a lot today. I feel like a fool for missing them. Your high flyers increase your ability to buy others in your margin account. No more missing the train.
I am buying 2002 LEAPS out of the money calls on my long term favorites like SUNW, and selling the stock. Then I'm trying to leg into surething spreads with offers (GTC) to sell higher priced calls. If the market keeps going up, I should fill on some of these. I am selling lots of stock in high flyers substituting these call. With cash for margin I will buy some 2002 OTM puts (to replace my stock in a couple of years).
Of course, if there is a crash in late January (or even earlier) I'll buy back the short calls.
No doubt the techs will continue to grow earnings rapidly, even if the economy tanks. There's no stabilizing PE's above 30 on anything. A crash is a crash. And no one is secure. Stock prices are set by the most eager buyer and the least eager seller. (it only takes one idiot to make a spike (check out NTPL). No matter how hard a stock is beaten down, new suckers are born every day (checkout ADSP today). Some ought to drive a stake through that one's heart.
SUNW is the real thing, but terribly overpriced. As they say in the boxing ring, protect yourself at all times.

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