Gottfried, we used to have those 20% corrections in the Dow which translates to more than 50% for the Hi-Tech Silicon Valley stocks. Those were the days when the Internet was not being used as it is being used today for investment. The Investor used to be at the mercy of his broker; the selling and buying based on the recommendations of Analysts....Things have changed. The Hi-Tech industry has grown to 1/3 of our economy from almost nothing 3 decades ago or something. Silicon Valley (that small area of Santa Clara County, where Orchards used to flourish, and its outskirts) is now Third Leading exporter---third only to New York and Detroit!...
We can not see those 20% corrections anymore because the different sectors are alternately self-correcting themselves. It is like if there are frequent small quakes say in the Bay Area, the pressure is being relieved to avoid the bigger quake...So, for those out there who are still agonizingly waiting for that big quake of a correction in order to buy at almost liquidation prices---they are in for a Long , looong wait that might outlive themselves!...
As for the AMAT investor? Corrections now last for a day or a few days---Your are in for a Long, loong Happy Investing!...When the time comes that AMAT corrects more than 50% again---try what I did with my "Leaping Out of the Alamo" Leaps! (Terry has his Kamikaze Options, which I don't recommend)...These Options were the Jan 1998 30 Calls (WPJAF). Last August when I was about to Financially die defending AMAT at 23, I bought those out of the money Leaps at 4/sh. I figured out, by Apr 1997, AMAT would be emerging out of the Big Hole to break the all time high at 59 7/8. As it turned out, I was practically close. Recently, the Option sported a price of more than 40---a 10 Times increase in value for 9 months, repeat 9 months! (with still 8 months to go!)...What a LEAP!...I must confess that my last WPJAF was sold at 23 some months ago; that is because I rolled them over to shorter expiration Options that have more Kick Upwards---a move I do not regret since my money performed more than 10 times (considering that I made substancial withdrawal from my IRA account earlier this year)...So, to All AMAT Investors---you are more lucky than others, you can play with LEAPS (a luxury only a few chosen stocks have)...Of course everything good is possible because you have AMAT!... |
