Week 44/Year 2001: EDIG vs. NASDAQ
With this week's close at 1745.73 the NASDAQ is down 29.3% from its 12/31/2000 level of 2470.52, and down 57.1% from its 12/31/99 level of 4069.31.
EDIG closed this week at $1.45, down 14.1% from its $1.6875 price on 12/31/00, and down 50.1% from its $2.9062 price on 12/31/99.
Despite the constant efforts by the bashers to discourage EDIG shareholders, EDIG has recovered from a brief period of underperformance by surging well ahead of the NASDAQ Composite for both comparison periods.
Here is the scorecard for this year: In 34 of the 44 weeks EDIG has outperformed the NASDAQ Composite index on a year-to-date basis.
For the period since 12/31/99, EDIG has outperformed the NASDAQ index in 30 of the 44 weekly comparisons.
Actually, EDIG could fall to $1.19 (an 18% drop) and still be ahead of the NASDAQ index this year.
Or, put another way, the NASDAQ would have to climb by 377 points - to 2123 - to equal EDIG this year.
Some bashers like to point to the decline in price that e.Digital has endured from its 1/24/00 peak and claim that EDIG has performed worse than most tech stocks.
But consider this fact: Even after the recent recovery, of the 150 largest technology stocks (by market capitalization at their peaks) 65 (over 43%!) closed this week at prices which represent more than a 90% decline from their peak value (as did EDIG, of course.) The average decline in value for all of these 150 stocks from their peak price to this week's close is 81%.
What is the point I am trying to drive home with this weekly comparison?
Not that EDIG has been a better investment than holding a diversified group of NASDAQ stocks this year (although that has been true in 34 of the 44 weeks), but rather that EDIG is closely following the fluctuations of the NASDAQ prior to the expected release of good news from the company.
EDIG shareholders know that they have a better upside potential than the vast majority of stocks in the NASDAQ Composite and are thus unwilling to sell their shares at these prices.
Yes, the NASDAQ will recover over time and will someday surpass its previous highs.
But when e.Digital is associated in news stories with the latest and by far the best digital jukebox, marketed by well-known consumer electronics brands, what will happen to the price of EDIG3? Could it rise above $4.26?
Of course it could, and likely will. But the NASDAQ would have to rise above its old 5132.52 all-time high to keep pace with EDIG if that happened.
Which do you think is more likely to occur first? A rise in the overall market above its old all-time high, or the release of revenue-related news about e.Digital products that could send the stock skyward?
For me the answer is clear and that is why I have been purchasing substantial blocks of EDIG at these levels.
Stay the course and ignore the rantings of all of the foolish, manic bashers who fester on Raging Bull in lieu of a real life. Their goal is to disrupt the e.Digital investor community which has developed. Today we even had one such basher admit that EDIG was a strong investment opportunity in the near-term.
The "long-bashers" (who hold the stock but whine every day on this board that news hasn't been released to meet their impatient expectations) will be the saddest of all when exciting developments are unveiled, because they failed to heed suggestions to take advantage of a golden opportunity to average down their cost basis at these prices.
Recently the company announced both a new IBM MicroDrive-based audio device with voice navigation and a new strategic partner. Fred Falk has also advised all of us in his most recent letters that the list of OEM customers continues to grow and includes some of the best known brands in the consumer electronics world. The new product is being produced and sold right now through the e-commerce site which has just been unofficially launched. We have been advised that a coordinated publicity campaign for that player and the new www.Edgital-Store.com site will begin on Monday, 11/5/01. The Shareholder Meeting is the next day and we can reasonably expect many positive announcements in the next few weeks, possibly in connection with the Comdex and the CES shows, each of which should have a favorable impact on the share price.
Keep a reasonable perspective on the relative state of your investment here. It is doing just fine, given the condition of the market.
JimC |
