Might as well post this here too.
Perspective - History - Charting
A little perspective, a little history, a little charting, and then, hopefully, a little calm.
First, a little perspective. On a closing price basis, SILI has corrected only from $144 to $113. This is $31 per share or about 21.5%. Not very extreme and not nearly as dramatic as it may seem. The intraday correction is greater: $165 to $100 or about 40%. But, intraday is always more extreme and, more importantly, this MUST be viewed in the context of a run up over ONLY a week's time (the prior week) from $80 to either $144 (closing) or $165 (intraday), depending on how you view it. The closing increase was 80% ($144), the intraday increase was 105% ($165). From close to close, SILI is still up over the past two weeks from $80 to $113, or a bit over 40%. Not too shabby for a two week span. For those that are complaining that SILI has not bounced back as quickly as some, but not all, other tech stocks in the past two days, compare those stocks over the last two weeks, rather than the last two days and you will see a much different picture. Len has posted the comparison and it clearly shows that SILI has done far better than most, if not all, comparable stocks. It just takes a little perspective.
SILI is not going to outperform every other stock every day. It is unrealistic to expect it or any stock to do so. Indeed, SILI will even underperform most stocks on some days. But, so what? It means nothing. If you look at the bigger picture, SILI has outperformed, and IMO will continue to outperform, most other stocks most of the time. (With my apologies to Abe for mutilating his "you can fool them" line.)
Second, a little charting and history (and more perspective): everyone that is nervous or concerned about the correction from the $165 intraday and $144 closing highs to closing $113 and the intraday low of $100 yesterday should look at a daily chart of the last three months. Look at the period from 1-15-00 to 1-29-00. What you will see is that pre-split, SILI ran over a three day period from $128 to ~$220 (closing) and $245 (intraday). It then backed off to $180 before heading back up again. The correction and consolidation lasted for a couple of weeks, but SILI then headed from $180 to $285, before correcting again. It looks far less dramatic on the chart now following the 3:1 split, but multiplying it out by 3, it was just as dramatic then as the current one is now. This is what people mean when they say it will just be a blip in the future.
The correction after heading up nearly 72% (closing) and 91% (intraday) was from ~$220 (closing) and $245 (intraday) to $180. On a closing basis, this was an 18% correction and on an intraday basis it was 27%. The closing correction of 18% against the runup that preceded it of 72% is remarkably similar to the current 21% correction on an 80% gain.
The current correction is NO different from what SILI has done on at least four other occasions in the past five months. Why is this important? Because it defines and explains the price movement of the past three days as NORMAL for SILI and not a fundamental change in anything. In fact, from a perspective standpoint, the general NASDAQ and semi weakness (which did not exist in the other four SILI corrections) should have produced a more severe correction. It did not. This, too me, means that SILI is just as strong now as it has been in the past (if not stronger). It is that past strength that has driven it up 1000% over the past 12 months. IMO, what the NASDAQ and semi weakness did do is make the intraday extremes a bit greater on this runup and correction. But, based on what SILI has done in the past, this just meant better buying (at $100 to $105) and better selling (at $150 to $165) opportunities. Volatility and extremes can be your friend if you keep them in perspective.
The other thing you will notice from that chart is the drop off in volume following the last correction. This, too, is NORMAL and is not a dramatic sign of anything. It, too, does not as extreme now since the 3:1 split, but it sure did at the time. Again, all a matter of perspective and now just a blip in the past -- albeit a profit making opportunity blip.
SILI, like any and every other stock, will not go only up every day. There will be down days and there will be corrections, but not every day (thankfully). They are normal. There will be great up days and great runs, but not every day (unfortunately). They too are normal.
One of the things that I frequently do that helps me to be less stressed, concerned, and emotional about price movements is to not dump every available dollar into an investment all at one time. Some call it legging into it. I will NEVER lose money by not having more in a stock. I may not make as much, sometimes, but I will never lose any portion of what I have not invested. But, by not having it all in ay one time, I also have the flexibility to buy more on dips and when necessary, average down.
It took me missing buying on the first two SILI dips (since I bought initially at $45 pre-split) -- out of fear that the sky was falling -- to learn that the dips are GREAT buying opportunities. I have been very pleased with my buys on the last two dips (before this one) and fully expect that this one will also be rewarding. Why? Because a little perspective, a little history, a little charting, leaves me not needing to hope to be calm.
The fundamentals of SILI are as strong as ever. Shortly, SILI will be back to and above where it was earlier this week. When (not if) it happens, those of us (you) that bought more on dips will reap the rewards. In the meantime, relax and have a good weekend.
Troy |
