John,
If you think the stock will go to $3/shr from its current levels, why do you think that at that time you will not say: "I wait till the stock goes to $1/shr by mid March 2002 at which time I will buy a block of shares...,etc." And when (and of course if) it goes to $1/shr are you sure you will not say "I think I wait till the stock goes to $0.5/shr at which time I will then buy a block of shares..."
Markets are about human emotions. When a stock is flying high people buy it thinking it will go higher. And when it is going down people wont buy thinking they can buy it at cheaper prices. Unless you have the discipline and understanding of what you are about to do, then setting a radnomly chosen price to buy makes no sense.
All the pessimist in a market downturn are considered to be market gurus, and all the optimists in an upward market are considered to be market gurus. It is business as usual.
For JDSU to drop another 50% from its current levels is not impossible. But for that to happen the whole market must also really go down big time. For all I know that can very well happen - but I dont know. I buy based on my understanding of the underlying company and the business they are engaged in and the technology they are offering. This does not mean valuations for which valuations are all based on the basic human emotions and "perceptions". People pay $40 million for a Van Gough painting that has a bunch of trees and flowers - but at the time Van Gough painted he had to literally pay to give away his paintings!
As for me, I have a ton of JDSU shares bought at much higher prices. My average per share price is at around $40/shr. So you can imagine the amount of pain (on paper) that I am taking right now. But I am not worried, and in fact will be adding more sometime toward the end of October. JDSU has the financial strength and the necessary monopoly to grow beyond we can imagine when (and not IF) the economy turns a 180 degree turn. As hard as these stocks fall, they go up even quicker when the time comes for which pure market emotions swing in the positive side as quickly as they become negative. -- And that will happen. Dont know when - but it will happen.
Markets are based on a set of logical factors (P/Es, P/Ss, revenue growth acceptance, etc.) and a set of illogical factors (pure human emotions, feelings and perceptions). It is those illogical factors that in the final analysis define the logical factors.
Regards, |
