Hi Teri / Daniel: As I said before, I was a bit surprised to see people in this thread shorting PeopleSoft, as it is one of the strongest stocks in one of the strongest sectors of the economy with an excellent performance record, and therefore I would see it as a suitable stock to go long in when the overall conditions in the market are favourable.
Also as I said before, when you are on the short side, your risks would seem to be reduced if you do the opposite -- ie. select the weakest stock in the weakest sector which is being hammered by the competition and whose profits have gone south, and to do it when the overall conditions in the market are turning ugly.
If you go to the Profiles section of this site and pull up a comparative chart of "Software Powerhouses" for the past 52 weeks, you will see that of the big names, the two worst performers have been Novell (share price is down 36% so far this year in a booming market) and Apple (down 47% so far this year).
Have a look at the Company Profile section for Apple -- look at the ferocious competition in both software and hardware (eg. Microsoft, Compaq, HP, Dell). Heard of many companies lately who are throwing out their Wintel machines and replacing them with Macs?
Then look at its profits for the last 4 quarters. It has a market capitalisation of 2.8 billion and a profit margin of -1.5% (ie. it's making a loss). Nevertheless, it's a large stock on the NASD with good liquidity (ie. easy to get in and out of).
A risk in going short of course is the possibility of a takeover, however, I seem to recall they turned down an approach from Sun or SGI.
Recent press reports have hinted that MSFT is helping developers with Mac internet software for fear AAPL may disappear from the market, which would give MSFT anti-trust headaches.
Lastly, if you get hold of a charting software package such as Metastock the overall market (eg. the DJI) appears to be losing momentum (look at a momentum indicator such as MACD).
Warning: always seek the advice of a licensed investment advisor. You can lose all your money trading stocks. I am totally unqualified to give any investment advice whatsoever.
Regards,
Stephen
|
