| Because I, like Bambs and John Shannon, think that Cisco should be in the single digits when you look at discounted cash flows. So buying Cisco above $8 is taking a big risk. When I take big risks, I usually do it with money that I can lose and not feel it. So with my real money, I mostly invest in mutual funds and am very well diversified. I believe that we are coming out of the trough right now and investments made today in large caps will earn you a good penny in the years to come. That's why I made that previous post. The intent was to show people that disciplined investing over the long term is important to overcome fear and emotion based investing. I believe that Cisco is a overpriced primarily because of its o/s share number, but otherwise, fundamentally it is a very strong and sound company with very good growth prospects and topnotch execution. I also believe in buying companies when they are out of favor and that networking is still in the second or third inning of a nine inning game. Cisco is the number one company in that category and has the opportunity to earn monopoly-like returns like Microsoft did, when this economy comes back strong next year. They have the scale, the products, the execution, and the cash staying power. So when the economy turns, Cisco will lead the pack back up. We've already seen how explosively Cisco can move upwards when things go right. This stock could easily trade at $20-25 by the end of this year and $35 by the end of next year, whether discounted cash flows analysis dictates it or not. Why I won't buy above $14 is because my personal tastes for risk are very low. So I mitigate as much as possible. Below $14, I start to feel comfortable that my risk is mitigated. Remember that the last time I bought was in the $12 range and I promptly sold when it went above $15. I wouldn't mind repeating that scenario. But with my retirement money, I don't gamble. |
