Andreas:
It is the institutions which drove the stock price down to $18 and they who brought it back up to $33. But to continue buying they need insurance from analysts. Some influential analysts are still neutral on COMPAQ, some on the buy side have set 12 month targets of $35 (a few $50) and some who recognise a turnaround may be possible think it will be a slow process. Like you, they wonder whether they could not get faster and better returns elsewhere, and come back to COMPAQ if and when it starts moving.
My own view is that if someone gets to know so much about a company that they begin to empathise with it, begin to share management's view, and to continually excuse poor performance, and if they start to think that their knowledge of it must be kept up to date and will be wasted if they invest elsewhere, then they have probably lost some objectivity. I am not suggesting that you or anyone in particular is in this situation - I mention it as the kind of trap we have to be careful about.
If someone was to offer you a share that would make a certain 20 -25% in the next month but you would need to sell your COMPAQ - would you do it? If not your expectations of COMPAQ may be too high.
Of course, you cannot get a guaranteed 20-25% in a month, but perhaps the search for such a stock may prove less frustrating than watching the COMPAQ pot boil. |
