Gregory,
I concur. The problem is the general market condition. If a company such as JDSU--with such a bright past and future--can get cut in half, then the general stock market condition is likely the problem.
Sure in any bear market some stocks buck the trend big time. Picking them, however, is extremely difficult to impossible. Maybe JDSU will buck the trend and recover its upward momentum. Odds are it won't. Not until we reach a true market bottom and that is a long way off yet. The true bottom is way longer than most people think or would care to believe. We still, for example, have more of Mr. Greenshades rate hikes to work through the economy.
When we do reach the bottom, it will be interesting to see. The stocks that lead into the market top are not the ones that lead out when the bull returns. Will JDSU buck that trend? It may, but the odds are not favourable. I believe that the trailing p/e of JDSU at it's bottom will be in the 15 to 30 range. (Probably in the lower third of that range.) Look to the past at other similar companies at market bottoms. That should help guide us as to the re-entry point.
As for the 'cut in half,' what happened to that value? Well, d i s t r i b u t i o n happened. And the much-maligned analysts, told all of us--they still do!--that stocks are going up, so hurry and buy. Meanwhile, their back desks were selling--distribution--to the masses. Many said they were seeing a process of distribution starting a year ago last Fall and increasing during the winter! "Fooey!" said others. As the market and economy topped out, many people and institutions sold high p/e stocks into market strenght(distribution) to investors who said, "earnings don't count" and "the growth is so strong this stock has to go up" or, "it doesn't matter bear or not, I have the guts to hold through any bear market." Statistics show that most of those in the latter category sell out _precisely_ at the market bottom. Statistically, most of those feel so burned (rightly so) that they do not get back into the market until it is well into the new bull. And on it goes.
I read an interesting story: There were two guys who thought they were making gobbs of money selling a bunch of pork bellies back and forth between themselves. They thought they were pretty smart too, until one guy got hungry and ate them all up. Reminded me of the story where the guy ate the tulip--"Siemper August."
There has been an interesting debate here of late: Is the FO market growing at an accelerating or slower rate? Given the general market condition that question, I believe, is moot. I thought that question was moot back last winter when I got out. I thought then (thanks to Pat and Kent), that the market for FO was still growing but I bailed anyway.
Another thing: buy on the dip has not worked since early February, 2000. That is a phenomenon of a bull market. Now the motto should be "sell remaining holdings into strength." Be the distributor, not the distrubtee.
But, what the heck do I know--I ain't real smart as some have written.
Ciao,
David Todtman |
