Current PSR for Qualcomm has no been lowered to 17.67 from the very high 20's of earlier this month. I only brought this up because Moore/Kippola/Johnson mention in the revised manual about Microsoft and Cisco trading around a PSR of 16 in a 'normal market' in the last few years and up around 18 - 20 on the high end. After the week's carnage, the stocks currently stand in this order:
Cisco - 26.44 (PEG - have to wait for the earnings report)
Microsoft - 22.68 (PEG 1.8)
Siebel - 22.17 (PEG 1.2)
Qualcomm - 17.67 (PEG 2.1)
I can't comment on the 'averaging down' theory as most of us, like Mike, placed our investment at a much lower cost basis in the spring and summer of 1999 for Qualcomm, one or two years ago for Siebel and many years ago for Cisco/Microsoft. However, those investors with patience who were not so fortunate to have invested money in some of these stocks way back when, could certainly be keeping an eye on something like the PSR's which Mr. & Mrs. Market will adjust every now and then for the investor willing to use patience and not jump before knowing the water temperature, depth and velocity of the fall from the jumping height.
Whether one calls it 'averaging up' or not, I have new holiday gift money sitting in cash within my children's accounts which I need to put to work at some point. I'm willing to remain patient to put this money to work and it will go into the obvious 'choice' gorilla stocks mentioned above which they already hold at a much lower cost basis when the temperature, depth and height look appealing. As their time horizon is years and years out, I can afford to miscalculate a little bit, but waiting a mere month from Christmas, even though the temptation to jump in early was there, has thus far proven worthwhile at least in Qualcomm's case.
However well one times the shorter term entry point, the longer term will tend to erase the memory a few years down the road from now. Nobody should be surprised at the normal, natural ebb and flow of the stock market and valuations. It was just a short 4 to 5 months ago when things looked bleak. Let's not forget the September/October period of 1998 or the early 90's when Cisco was it and the gulf war was raging, or 1987 (I was living and working in NYC at that time). Holding stocks through these periods had levels of frustration that time tended to smooth out and erase the shorter term woes - whether it was war, interest rates, bear markets or ebbs and flows in valuations and market sentiment.
In the meantime - we've all got plenty of things to be thankful for and shouldn't forget to enjoy it.
Now, time to put some cream on my four year old's chicken pox...
BB
P.S. Mike, the Gemstar JVC VCR had to be 'set up' and considering I have satellite television - there were a few steps involved as I choose to do it manually because I didn't want each and everyone of those stations from Spain, Italy, France, Greece, Turkey and a few others.
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