>> Since we pretty well all agree that there is no significant upside to Q in the next six months, why take the chance on the possible enormous downside?
Let me field that, Dancelot.
First, consider that there are very few of us whose portfolios are primarily tax sheltered, so let's look at your premise in a taxable environment.
My first buy of Q, which was at 140 on 4/5/99 (since I wasn't as fast on my feet as you were <gg>). That split adjusts to 17.50. With Q trading at 56.625, I'd have to pay taxes on 39.125, which, assuming a 40% combined fed and state rate, would be 15.65. I'd have to buy Qcom back at 40.975 just to break even and in the mid 30s for it to make any significant profit from the exercise.
The key here is that I want to be invested in qcom, not because I'm in love with the stock, but because I think its business plan is a winner and that it is a brilliant long term investment. In fact, it is currently a value stock as well as a high growth tech stock, which is a combination I haven't encountered since April of last year!
Finally, I don't buy the premise that Q is dead for at least 6 months. All it will take is one announcement, be it blow out earnings, a Nokia deal, a major country commitment, or an acquisition offer (possible at these levels) for it to go through the roof, and even you will be too slow to catch it. Take rmbs as an example of how quick Mr. Market can change his mind; were you able to profit from it?
Buffett advised the perfect time to buy a stock was when it was totally out of favor. Can you think of a better example than the Q?
uf |
