Postmortem:
In the 2001 panic selling, I bought a lot of NTAP longterm calls. By January 2001, I had huge gains. Now, they are all gone. In retrospect, I made several mistakes:
1. Holding, rather than trading. In the huge run from 6 to 27 (9/01 trough to 1/02 peak), I should have taken profits. I posted repeatedly that the fundamentals couldn't justify a stock price over 17, but I thought 9/01 was THE bottom, so I decided to hold on. I didn't want to pay a lot of short-term cap gains. Now, I have neither short nor long-term cap gains.
2. using LT options, rather than stock. My 2003s will now expire worthless. With stock, I could just continue patiently waiting.
3. Overestimating my ability to predict where the market was going. I was sure, very sure, that 9/01 was the capitulation low for this bear market, so I ignored my own worries about valuation. I kept on being encouraged by signs that the economy was past its trough, and assumed that the stock market would follow.
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NTAP has now effectively put in a double bottom with the 9/01 lows. I have not changed my opinion that storage will be a rapid-growth non-comodity industry, and that NTAP is positioned in the right place in this industry. The problems with the stock, IMO, are entirely due to macro and market factors: war, double-dip recession, a general disgust over Creative Accounting. When those factors change for the better, the stock will go up. IMO, buying the stock in increments at prices from 10 on down, and holding LT, will prove to be a rewarding investment decision. |
