At points like this, it's easy to be swayed and give up the longer term strategies that have allowed one to beat the market averages over the years. As I posted in that earlier link from the Fool about Munger and Buffett having a bad year or string of bad years, they don't abandon the strategies that have built them long term success in the face of those underperforming years. Sticking with their strategies, they bounce back.
Thanks for the post Bruce. This correction or whatever you want to call it hasn't really changed my view on holding long term, but sometimes i wonder if i'm too late to the game. This is really my problem with investing. I understand buying companies with dominate market share. Companies with HUGE BTE. Companies that own the standard, ect..
It just seems that for me to feel confertible owning a stock there must be some sort of growth potential unknown by the general public or to buy a stock before that industry has exploded and is still a niche. For example, it seems like everyone already knows about NTAP or SEBL. They both have pretty high PEG ratios..
RMBS and QCOM...i feel have more potential, b/c so many people are bashing them which creates selling pressure. RMBS, however, isn't a investment. More a gamble. They haven't truly become the standard or captured 30 to 50% market share, although roughly 48 to 52% of the market has decided to pay royalties on SDRAM and DDR, but Rambus must win the court cases before that's guaranteed revenue. If they lose against MU, then the stock will get hit hard.
Qualcomm on the other hand, has a very high probability to generate billions in revenue from 3g, mainly b/c 3g will be some form of CDMA. Obviously, once QCOM spins off the chip business then this FUD about which standard will win (CDMA2000 or WCDMA) won't matter anymore! Unless you own the SpinCo stock.
Gemstar is another..revenue generated from the IPG is small and they are not widely known. If revenues begin to explode and the IPG becomes the first screen seen by most TV viewers then the upside is much higher.
JDS Uniphase is widely known, but people are selling this stock over concerns of a fiber glut or a slow down in fiber optics. This might be true, but eventually fiber optics will take off again and JDSU is fairly valued or getting closer to it.
People/analysts on CNBC say BEAS is the stock to own. None of them are recommending JDSU or BRCM. Yet they've fallen more, which provides more upside. Have a lower PEG, ect..
I understand i have to pay more for the best companies, but when a stock has a market cap of 29 billion (SEBL) and has P/E of 363.58 how much future growth is already priced into the stock? |
