I'm considering buying more, at this level, using margin.
I'm still holding the shares I bought at 65 and 70 last year. If I did buy, I'd probably use the first chance to unload my higher-cost shares without a loss, thus reducing my cost basis.
I've watched QCOM go up,
I watched telecom service stocks crash
I watched telecom equip crash
I watched the chip companies that sell to the telecom equips crash
and, finally, I'm watching QCOM crash. I wish I had been smart enough to see the disaster working its way up the supply chain.
Reasons to add:
1. We've formed a nice double bottom with the July 2000 lows.
2. Sentiment on tech, chips, and telecom is very bad. I think it's now safe to say that all the momentum money is out of QCOM.
3. the recent news, that WCDMA, the standard created to break QCOM's lock on 3G IP, has failed, is very bullish for QCOM's longterm profit stream. Now, instead of having islands of cdma2000 in a sea of wcdma, it will be the other way around.
4. when the economic downturn is over, and techs are back in favor, QCOM is going to abruptly rocket above 100. The fact that the stock could get to 100 in November 2000, 7 months into a tech downturn, shows how good things can be (when the market is listening to good news).
Reasons not to add:
1. buying on margin in a bear market is dangerous.
2. the bear market looks like it's going to continue till at least July, the earliest that the Fed rate cuts could start to prop up consumer spending. The semis are starting to say that they don't see demand picking up (or inventories being cleared) till year-end. As long as we are in a bear market, all rallies should be expected to fail, and all support levels should be expected to fail also (after holding for a while, just to give us some false security).
3. more than most stocks, QCOM trades on distant profits, not 12M forward profits, and certainly not trailing 12M profits. So, when market valuations get compressed, QCOM should suffer more than others.
4. there are beginning to be some really compelling valuations elsewhere in tech, in the highest-quality companies, and I already have a lot of money in QCOM. TXN below 28, EMC when support forms, CSCO when support forms, AMAT below 35, are all on my list to pick up sometime in this tech massacre. I still have some "ammunition", as I could sell my pharms (up nicely), medical equip (flat), and manufactured housing stocks (up 50% in the last 12M).
What are your criteria for reentering QCOM? |
