from RBBy: Netwatch
Reply To: NoneTuesday, 19 Oct 1999 at 2:17 PM EDT
Post # of 84679
RE THE SARDELLO STORY
It is amazing how a shallow bit of reporting by some hack will breathe new life to the bashers and strike fear into the hearts of weak longs.
Let's examine what was stated - do the math and you will see he claims to have purchased a total of 20,000 shares of EDIG at a total cost of $45,550, excluding broker commissions. He sold at 1.50, or for $30,000, thus showing a loss of $15,550.
Now, bring up a few extra windows and bring up charts for EDIG, SEBL, and INTU. Note that the first day he could have possibly sold EDIG for $1.50 was with 6 trading days to go in August. If he sold out that day, and immediately invested in SEBL & INTU at the best (lowest) possible prices of the day, and split his remaining $30,000 evenly between the two companies, he would have bought 220 shs of SEBL @ app. $68.- per and 560 shs INTU @ app. $26.75 per share. As of yesterday's close these investments would be worth a total of $31,236.25, which is hardly recouping his loss. Interestingly enough, if Mr. Sardello was astute enough to have bought at the exact lows (which in our example we have granted him) and to have sold at the absolute highs these two stocks have seen, he would have received a total of app. $40,400, still $5,150 short of recouping his loss, as was claimed he did. And we have not considered broker's commissions.
Do you think Mr. Sardello is astute enough to buy at the absolute low and sell at the absolute high? This is an individual who apparently invested $45,550 on the advice of a friend and some positive comments on a bulletin board, and then sold on superficial investigation. I like his quote "I didn't need to look further to realize what a mistake I'd made." He barely looked at all to invest and took a $15,000+ loss based on a fact that is known to all and a speculation on a product's release date. There are some astute individuals on this board, and I would bet that none of them would claim to be able to pick exact bottoms and tops, so in reality Mr. Sardello probably came nowhere near the ultimate results I've outlined. So to the hack that wrote the Smart Money article, how could you have accepted his claim that he recouped his losses?
Incidentally, as of yesterday's close his Intuit investment would be showing him a loss of $3.75 per share, or $2100. Had he sold EDIG @ 1.50, changed his mind and immediately bought it back with half of his remaining funds (the other half invested in SEBL, as in this example), that part of his investment would have been worth $13,300 at yesterday's close. In other words, he would have been $400 better off, plus brokerage, by staying with EDIG as opposed to switching to INTU!
Very little is certain in life; certainly not a stock, not even Disney. But we seem to be on the verge of breaking news for EDIG, and to sell at this juncture based on some tripe published in the investing equivalent to People magazine would be foolish indeed.
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