Some of the better GG posts from GTR today
Original post:
Due to a certain panic that set in last week, I find myself without any of what I consider core Telecosm holdings such as QCOM, JDSU, GBLX, ATML, CNXT, LVLT, NT, ETEK, TERN. I'd like to consider some options to put my holding back in place..
1) Buy it all back (at a 20% premium over the panic)
2) Wait until the short term volatiliy kicks in a passes my Limit Buy orders (risky if we don't see another Black Friday soon
3) Dollar cost average...built the portfolio back by buying on the daily dips.
Any good ideas...I promise to Buy & Hold from now on...
GG response
I have been told I should restrain myself in giving even an inkling of advice on timing--even on the board where I like to think I can post fast and freely rather than "institutionally,"--that racketeering lawyers watch and pounce when shares go down (see, Terayon). But the heck with all that. I would suggest that you buy the company I will recommend on Monday as a paradigm vessel. Then you pick up the others one by one as they seem ripe. Although some of the companies are not exactly cheap, several on your list are still rather low--as I recall Atmel went down sharply the other day and Global Crossing is being battered despite no change in its position except a foolish disposition by management to sell it too soon. I would suppose any bidding process would raise the GBLX price and am rather mystified at the moment, to tell the truth, at its failure to rise already.
The learning experience you have just undergone is hugely valuable and I know no cheaper way to grasp it reliably. In my early years as an investor, I read David Dreman on contrarian investing and Charles MacKay on Extraordinary Popular Delusions and the Madness of Crowds, but I did not really master the art of buying rather than selling into panic until a moment in 1981 or so when I sold most of my shares in a company called Newport Pharmaceuticals at a large loss when it plunged in a market crash and then watched helplessly as it made a sevenfold gain. That is an experience you do not forget.
***** GG post #2
1) Terayon has a unique world leading technology in cable modems. Suitable cable is already installed in perhaps 25 percent of the homes in the US and millions of overseas neighborhoods. Although digital subscriber line (DSL) has advantages for one to one links, cable modems are decisively superior in neighborhoods. As Hong Kong telecom is the latest to discover, CDMA is by far the best system for noisy environments. Cable coax--beset by cellphones, cordless handsets, CB radios, garage door openers and harmonics from scores of such appliances--is as noisy as it gets.
2) I have questioned TERN's diversification strategy (alot of application specific video and voice systems, such as iMedia that may be blown away by broadband IP to the home). But a more positive view is plausible: Terayon is buying an array of Israeli companies (i.e. it is adding superb talent) and is acquiring the ability to endow cable companies, which are unlikely to disappear, with a way to enrich their offerings with voice over IP, broadband multimedia, targeted advertising, and other markets.
3) The long term threat to TERN's franchise is fiber to the home. Although I have been urging fiber to the home for a decade, it will not become a major factor for five years or so because it requires the movement of complex and thermally sensitive optoelectronics out of controlled and easily maintained neighborhood hubs to the sides or interiors of buildings. By the time fiber to the home prevails, Terayon commands the talent to have developed complementary products.
4) As I always say, I don't do price or timing but it is relevant that Terayon's market cap is roughly one tenth Broadcom's and one third Conexant's.
****** GG post #3
An impressionistic observation on timing and price: buy low sell high. The wonderful thing is that the down side price is limited to zero (plus lawyers fees) while the highest upside is theological.
I don't know anything new about the JDSU/ETEK situation, but I have not heard of any obstacles. Both companies, in union or apart, command vital components at the very heart of the paradigm.
The chief source of ETEK's technology was Simon Cao (38 years old, 36 patents, and an optical genius). As I described in an earlier GTR, Cao is now producing his patents and inventions for Avanex.
I am not as enthusiastic about Motorola as I was a few weeks ago, but it remains a key company in wireless. I named and continue to believe in "the Negroponte Switch" (which suggests that nearly all profitable voice will soon be wireless and all profitable video will be wired, mostly fiber and coax). With thousands of patents, years of experience, and superb factories, Motorola will tend to grow at least as fast as mobile wireless, which continues to be one of the world's fastest rising industries. Moreover Motorola has disposed of its Iridium ballast. Aggressively developing CDMA, it has some of the industry's most impressive handsets set for release this year and if Mot has something it will be able to manufacture it in volume.
******
I am watching the effect of those cheap prepaid phones selling in Europe, Middle East, and Africa. Doesn't bode well for the big three companys' margins: NOK, ERICY, and MOT. Won't help GSTRF and their expensive phones as prices in these markets decline faster yet. Beneficaries will be RFMD and CXNT for the PAs.
Just what is a paradigm vessel? A company that will cause a paradign shift in technolgy?
Jack |
