Pls418,
You wrote, "You completely missed the point about my reference to oil. The comparison was not of industries but of situations. When oil services was at its bottom they were saying it was dead and would not come back for years, just like they are saying about telecom today."
I think you missed the point. There is a huge difference between a vital commodity cyclical (like energy) which generates true earnings, real cash in the good times, and what was once believed to be a new paradigm growth area, such as tech and, within tech, telecom, and which is now being touted as a cyclical industry. It just may not be so. If we don't have energy, tractors don't harvest crops, Daddy doesn't get to work, airplanes don't fly, the world stops. If Nokia cuts back production on cell phones or Denver doesn't get optically/photonically connected, it's no big deal. If Nortel and Lucent end up NEVER coming back, it won't make disturb a thing (except those folks who bought shares in their 401Ks). Your analogy is just too simplistic and therefore worthless to people who are interested in buying stocks at a relatively low price and selling them at a relatively high price, regardless of the order in which these transactions take place.
You continued, "As for JDSU you said even if they earn money in one of your remarks, you don't really believe they lost $3 per share in cash."
Au contraire, I wrote, "But (see the WSJ yesterday) there are 1.32 BILLION shares of JDSU out there. It lost over $3 per share last year. Even if it earns money, when will there be a payout for it which is reasonable for a $6 stock . . .?" I know they lost money, it's quite clear. Let's not misstate what I wrote when it's still there to be seen, sort of a public record.
Finally, you wrote, "As far as earning money goes they did just that last year"
You had better check that out:
yahoo.marketguide.com
They lost money in operating earnings, before and after tax adjustments and in net income in each of the last five years. Somehow, with extraordinary items (I haven't looked into seeing what they are but I assume they are sales of subsidiary interests during the bubble years, hedge fund style income) they managed to post some black ink which was overwhelmed in the tsunami of red for the June 30, 2001 year end. Five years with nothing to show for it and red ink predicted into the future.
Finally, "and if I wish to characterize a doubling of a stock in 4 years as an average 25% per year, I believe I can do so without anyone assuming that the stock did this or that in any particular period of time."
Look, numbers aren't my forte, you'd have to hang out with JimP or Kollmnh to crunch numbers in a robust way, but there's no way doubling your investment after 4 years gives you a 25% return over the time period. It's pretty much like the atomic weight of hydrogen, it's just a fact.
Kb |
