Dear Addi. That was a wonderful, warm and positive note - not unusual for you, but terrific just the same. We have been swapping messages here as well as by occasional e-mail for almost four years now. I love to read what you have to say. I have a high and warm personal regard for the many people I have met who were born and raised in Persia, but now live here.
I remember establishing my position in SUNW between May and August of 1997 as if it were yesterday. I think the P/E was about 17 that spring ... and I was filled with hope and positiveness (not to mention a very risk taking state of mind) as I put every dollar Jan and I had into my hope and belief in this great and wonderful company. And I mean we put in everything we had except our house equity.
Time passed, and in early October, 1998 we were just even on our big bet after a significant market correction in July and then again in September ... and then the excitement began. WOW, that was great.
My nervousness about high P/Es in technology stocks like SUNW, CSCO and others caused me to sell all of it by January, 2000 - not far from the peak. My intensive business and economic readings caused me to start to get bearish during the huge Nasdaq blow-off that February. And in June, while I searched for a way to make money on both the ups and the downs of the market, a close friend introduced me to futures and commodity trading through a wonderful teacher and trader named Larry Williams. In July of last year, I started buying puts on the S&P, which has worked out better than I would have thought.
I continue to take big risks when I truly believe in something that is much undervalued, has potential for gigantic growth, and is truly a story that I have carefully researched and come to believe in. Such is the case with Abiomed, although my risk is nothing like it was percentage wise as SUNW was for me in 1997. I do have 12,000 shares though.
Like you, I am an optimist by nature, but unlike you, I am almost 56, and we live, in significant part, on our gains from investments ... and I no longer work. My bearishness is not at all because I am negative on America, high technology or anything else. Rather, I think we face significant risk of an early 1970s type recession - not because I wish for one, but because all the multitude of things I read tells me that the macro economic realities are leading us down that path.
And I do not believe that lower interest rates, tax cuts, the entrepreneurial spirit or anything else will stop such a recession if it is already "baked-in" (so to speak) into the macro picture for both the U.S. and the rest of the world.
Could I be wrong ... absolutely ...
I hope I am wrong. I could switch investment strategies very quickly, and I will when I see it differently. But hoping that we will recover in Q3 or Q4 of this year because of an aggressive Fed, and some important tax cuts is not at all what I see coming. I do not see a depression, but I do see a continuing drop-off in the U.S. and world economy ... and a relatively slow recovery after that.
... and that is exactly how I am playing it ...
... if I am wrong, I will say so quickly ... just have me be wrong about the economy, and not Abiomed ... failure there will hurt significantly.
Let's keep talking ...
... your admiring friend
Ken Wilson |
