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Politics : Formerly About Applied Materials
AMAT 220.28-6.4%Nov 20 3:59 PM EST

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To: kdavy who wrote (45852)4/24/2001 2:59:14 PM
From: Katherine Derbyshire  Read Replies (2) of 70976
 
>>According to may way of thinking there is no universal rule to indicate when to buy and when to sell. <<

Nope, there isn't.

The intrinsic value of a stock is the share of the company's net assets that it represents. One of the things that takeover artists and value investors look for is a disconnect between the value of the tangible assets and the value of the stock.

The price of a stock represents some combination of the intrinsic value of the company, how much that value is expected to grow in the future, and market psychology. The arguments about investment approaches boil down to arguments over how to measure these factors and what weights to give them.

>>Don't hold a stock in a downward spiral. <<

What's your horizon, though? The great crash of 1987 is a relatively minor blip in the context of the Dow's last 50 years. The 2000-2001 bear market will look similarly insignificant 25 years from now. Buy and hold may not be the way to maximize your gains, but if it lets you sleep better, maybe that's a fair trade.

Katherine
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