If you doubt there's "wisdom in waiting for an uptrend to begin" because that's reductionism of some kind, then you must think it possible that...what? Prices for stocks like SUNW are going to go back up as fast as they came down? You're cleverer than that. Or that an uptrend can begin only to quickly reverse? That would be similar to a bunch of "last times".
The former. My observation has been in the last 12 months that stock prices have risen much faster than they have fallen, when they have risen. This is often a pattern associated with short-covering, my conjecture is that when the true bottom is recognized, there will follow a rapid and intense round of short-covering, long-reentry, and subsequent rapid rise in stock prices.
The rises haven't been sustained yet, and this pattern will convince the chart-watchers that the next rise will not be sustainable. Eventually, they will be wrong, but by then it will be too late for them to act.
Another reason for a fast rise when it starts: bad news is implicit, good news is explicit. Combine that with full disclosure regulations, and what you have coming out of corporate IR departments is total silence punctuated with bad news. This will, in time, become total silence punctuated with good news. The trick is to recognize this change when it happens, because this is the first time we've been in a slow stock market crash under the full disclosure rules. By the time you recognize it, it will be too late.
I'm going to go out on a limb here, and give my idea of 'fair value' for a number of stocks which I own. Think of me as an Anti-Ken. By the end of 2003 I expect:
SUNW: $49-$65, a return of around 400% from here.
CSCO: $66-$82, a return of around 500% from here.
WIND: $59-$67, a return of around 300% from here.
INTC: $54-$70, a return of around 250% from here.
How do I arrive at these numbers? I use a technique of my own invention which I'm calling "Pencil Analysis" (http://www.siliconinvestor.com/readmsg.aspx?msgid=15614416). Since I know I'm not the first to use this approach, I'd appreciate a proper name for it.
This is, of course, all just my conjecture, and humble opinion. Do your own pencil analysis, and invest wisely for the long term.
P. |
