re: Too far, too fast?
Yes, emphatically.
Sold at 50, half of the shares I bought last Fall at 30. The other half goes at 55. The shares I bought at 27.5, get sold, if 60 and 65 happen.
My general rule on selling here:
Assume an economic recovery.
Assume business spending on tech comes back by late 2002.
Using the above, guess 2003 EPS and sales. Be optimistic.
Decide what the upper end of a reasonable PE or P/S is, for my holdings.
Conclusion: stock prices above that level, clearly indicate a re-inflation of the Bubble. Bubbles, by definition, always deflate, sooner or later. Since I'm not willing to play the Greater Fool Stock Market No Limit Poker game (I'm not Bernie Ebbers):
Plan: Sell, in increments, when we reach those stock prices.
Continue selling, as high as we go.
In this latest dip (is it over?), I began at 35% cash, used it all up, and started using margin in late February (a modest amount). With today's sale, I am back off margin. Tentatively (this is a hesitant and approximate guess), I'd say an intermediate-term rally could bring the Nas above 2099 (the January 2002 intermediate-term peak). This would bring us back into the region where the Nas stalled from April to August 2001 (2000-2300). That area seems like a likely area for the upcoming rally to stall.
We've had a lot of news, in the last 3 months, indicating a turn in business fundamentals. In spite of that, the herd of investors stampeded South, last month, selling off stocks. We gave back almost precisely half (a Fib number) of the September-to-January gains. That was why I was willing to start using margin at Nas 1800, rather than my previously-stated plan of using margin beginning at Nas 1400.
Maybe the herd stampedes North for a while, now. I have no idea what happens next, but I know what my plan is for the likely futures. In the January 2002 rally, my portfolio got to within 15% of my April 2000 peak. If we see Nas 2300, I'll get above that high-water mark, which has stood for almost 2 years. And, once I get there, I am going to grasp that wealth in a very, very, very, very firm grip, and HoldOntoIt, this time around. |
