Kory,
Your point about holding long-term is stronger the longer you've held. For investors who bought before 1996, the recent plunge may only have cost them 30%. Whereas somebody who bought last January may actually have lost money, and almost everybody who bought for the first time during the past six months is now underwater.
The point is that holding long-term is still the very best way to make the biggest gains but you MUST get in early. Jeff's point is that with the extreme volatility the idea of "buying the company" well into its successful run (THQ is not growing 100% a year anymore) is much more risky than it used to be. At the same time, because of the volatility, the rewards for buying at a technical low (say, at or below the 200 dma) seem to be obviously superior compared to, say, a strategy of dollar-cost averaging.
It always amuses me to hear all the bad press given to the strategy of "market timing." Every Nasdaq MM is a market-timer, and they all make piles of money. Truth is, market timing is not a bad strategy, it's just a bad strategy for inexperienced and/or uninformed investors. With all the information now disseminated over the Internet, there is no excuse for being uninformed, and while that doesn't mean we should all become market-timers, it does, IMO, make market-timing a far more reasonable approach to making money than it was five or ten years ago.
One of the reasons a lot of THQ investors don't sell the tops is that they know the "big top" is yet to come: when this short position covers. That could come about naturally and slowly as the company executes or it could come about explosively if the company gets acquired. I own nothing but THQI shares in a long-term account that I don't trade for the single reason that it would bug me too much if I ever missed this "big top."
But for a short-term (1-12 months) strategy, just draw a straight line from the lows during the past four years and you can see what a favorable time it is now to buy. That's TA at its most simple. (And perhaps most useful. "Things should be as simple as possible, but no simpler." --Einstein) The stock might decline a little more from here based on that four-year chart but by the end of the year I bet we see 50-60; I say that based on the fundamentals that will drive the price forward as you predict, and the TA for giving me a target. |
