Very interesting reply.
Overvaluation:
I'll admit to having price "targets" when I buy a stock. For example my price target for ctxs was 75 post split and for gemstar was 80 post split. I'm not sure at this point what numbers I arrived to give myself those targets but those are the ones I worked out and wrote down: target for "by summer 2000".
Now when ctxs reached and way surpassed that target and gmst did the same by the WINTER before the summer of 2000. I was perplexed. I "know" there is always a tech collapse every spring. (God knows any USRX investor felt that strongly sick-to-the-stomach feeling in the spring where USRX was concerned. Funny story, by the way. One day in spring of was it 1997? USRX was tanking badly and I called Fidelity to sell a zero coupon bond I had and buy USRX with the proceedings. The rep on the phone said "You're selling a bond to buy WHAT?????" It was so funny.)
Anyway so what to do? It is difficult to sell a company one intended to hold for "core" (whatever that is) even when the target is reached...but when it's reached early, and right before the famous time-for-tech-collapse time..well I was looking for someone to advise me to get out. (But, alas I didn't.)
Qcom is a different animal: I have no "target" price. Nevertheless when a stock goes up 156 in one day, it's pretty obvious that gain won't be kept. I sat down at my computer on Jan 3rd, stayed home from work, in fact, to sell lots and lots of my Qcom calls and leaps. Just ended up selling the Februaries. Boo Hoo.
So I subscribed to an advisory service but still didn't "obey the call".
But I don't know if that answers your question: overvalued because the market caps of many of the tech stocks are ridiculously higher than the company's yearly revenues. Overvalued because there is no logical way to say "Well GMST or GSTRF will make this much profit so it's logical for it to sell for this much times earnings" etc. Because they don't.
And interest rates...well, eventually if the Fed keeps raising interest rates, it will become so costly for businesses to borrow money that they either a. won't make the necessary improvements or research to ensure better products that people have to rev up to or b. they have to pass the increased cost on to customers so they can still make a good profit and prices go up and demand goes down. That is not good for the businesses.
That's how I was thinking.
But the bottom line is, I had enough money in Jan-Feb to take a lot of profits and still have plenty in the market. But there's those delusions, you know, and I would have loved to fund a really good LP campaign so the media might even "allow" us in the debates, where the public could learn there really is a party that has a different view then the two "only" parties are giving.
Also, since I'd changed my "time view" from working four more years to working 10 more months, I should have changed at least a little of my investment strategy, much as LindyBill and Mike Buckley on the G&K thread did, putting enough aside in Jan for years years and years.
Have I gone far afield?
And how did you know to sell Bre-X?
Freeus |
