re: QCOM support:
If you would condescend to continue a discussion with an ignorant fool who cannot see things that are obvious to you:
You make a very useful division among QCOM shareholders, putting them in different categories based on when they bought. Let's look at each group, one at a time:
1. Those who bought by 12/98, and are still holding. Everyone here has a cost basis under 8.24. They have held for years, while the stock went from 5 to 200 and back to the 30s. They bought before this was a StoryStock, before it was a momentum stock. They bought because they believed in the company and the technology it owned. I would consider everyone in this category to be a Strong Hand. If the price goes down further, they will still believe in the company and technology. That's why they bought, and the reasons they bought haven't changed. They have proven they won't sell on weakness or bad news.
2. "the ones that just bought and are in pain from the quick drop". How many in this category? Very few. Not enough to make any major move in the stock. These people, jumping in and out, they influence the day-to-day volatility, and little else.
3. "those people that bought after the initial jump off the multi-year base". You see a base/consolidation in May and June 1999. I see a stock in a sharply rising channel, from December 1998 through January 2000. No base, no consolidation, anywhere in that time period. The stock went straight up. In the area you call a "base", we continued to set new higher highs and higher lows, every consecutive month. The only time, from 12/98 through 1/00, when each successive month didn't see higher highs and higher lows, was the July-to-September 1999 period. So, if you wanted to pick a "base off the initial rise", it should be there. The support level would then be at about 35, not 25. However, both those "bases" are too short, not enough stock changed hands at those levels, IMO, to make them useful. A reliable base ought to last more than a month or two.
4. A more useful support line, would be a line drawn (on a log chart) connecting the two major intermediate lows in this bear market (in July 2000 and April 2001). Interestingly, that line, extended to today, is at about 35.
5. Valuation (skip this if you predict stock prices without any reference to the company's future profits): let's assume that the $1.30 expected for FY02 doesn't happen. Let's make a worst-case: they only make $1.05 next FY, same as in FY01. OK, then a "final flush" when support at 25 fails, would send the PE into the teens. Is this realistic, given that all the LT EPS growth estimates I have seen, have been between 30% and 40%? And that, so far in this bear market (21 months and counting, since QCOM peaked), QCOM's earnings have been more reliable than just about every other big cap tech?
You strike me an a smart, successful person who, like many smart successful people, is firmly convinced that you are smarter than 99.999% of your fellow investors. Which causes the consistent error of overconfidence, exaggerating your own ability to predict the future. |
