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Technology Stocks : Broadcom (BRCM)
BRCM 54.670.0%Feb 9 4:00 PM EST
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To: 2MAR$ who wrote (6308)8/20/2002 12:08:57 AM
From: Larry Livingston  Read Replies (1) of 6531
 
Valuation is pretty much irrelevant in the short term. BRCM is driven entirely by technical factors. Right now it's short covering and index basket purchases. I'm not saying it couldn't hit 25, that I think rests with the broader trend of the S&P and NDX.

Buying BRCM based on a wireless story is kind of crazy unless you're holding period is a couple of years. By then BRCM may have moved from the 20s down to 5 and back a few times.

It's better to buy and sell the swings in a bear market. Right now BRCM has flat to declining revenues. It's burning cash steadily and has not proven itself different from any of the high multiple bust companies out there.

Safer to wait on the sidelines towards the end of a technical move.

What will happen if any accounting irregularities emerge?

Of course everyone needs to make their own decisions. But to ignore the technicals in light of the fundamental emptiness of the financials would be foolish.

Don't get me wrong I think broadcom probably has great products but so did a lot of other companies that are no longer around. Beware of companies where insiders sell and keep selling all the way down. If they believed that wireless was going to make a difference they wouldn't selling as they are. Their selling is too great to be diversification.

Best of luck,

J
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