I want to raise a point that has been discussed here before but can be perhaps seen in a new perspective now that we're on the ground looking up.
This is the old "get rich with a concentrated portfolio, stay rich with a diversified portfolio" bromide.
I'm a Sun long until I think they've really dropped the ball, which I don't yet (although I'm more skeptical than I have been in the past), so I'm hurting along with everybody else; I'm down a pretty healthy sum just in SUNW alone since October, and SUNW is now only about 20% of my portfolio: FORTUNATELY I've been averaging out of it since February 2000. And of course all the rest of my stocks have gotten hurt too, the techs most of all and the conservative ones less so. Today, 20% is too much. I will sell it down to 10% next time it goes up a little (and there will be a next time).
But I'm not feeling under any pressure to sell. I'll take my time.
twister and the clown-killers, who in fact really WERE not-wrong-just-early, still see SUNW going to $10/share, but I don't agree. Things will get better eventually. The Internet isn't going away, the U.S. economy isn't going away (notwithstanding Dubya's best efforts to make sure it all ends up in the pockets of his 5,000 best friends), the global economy isn't going away, and SUNW hasn't made any missteps yet that disqualify it as a quality stock, at least none that I can see.
But (here's finally the punchline) the main reason that I don't feel under any pressure to sell is that I am diversified. I keep a lot of cash. I have a lot of bonds. I have a lot of "old economy" stocks that pay growing dividends. I was up to 50% SUNW for a while and got EXTREMELY lucky with that ill-advised and highly risky arrangement, and was EXTREMELY lucky to lighten up on it a lot with almost magically correct timing (due entirely to luck).
This market the last few years has been a fascinating lesson. The bears were wrong until they were right. Everyone hated them when they were wrong, and now everyone hates them because they were right; but they were the guys that actually knew what was going on. The "trees growing to heaven" longs are now hoping that we have a great year and get back up to 80% of where we were at last March.
SUNW is a great company with great management and it will recover. Nonethelesss, I personally will NEVER have one equity be more than 10% of my portfolio again, once I sell SUNW down to that level. The quality of the company simply doesn't matter. The stock market is too treacherous and insane to put all your eggs in one basket, or two, or three.
--QS |
