True - the dollar now is probably worth 1/4 - 1/3 of the dollar around 1970, but P/E and other ratios are still fundamental in measuring a business and determining its valuation based upon historical data and trends.
I liked CI at 35 now that they are forecasting eps of at least 6.25 for 2003. A 35 stock price takes into consideration the risk factors that investors are taking by buying that stock since I believe that the 6.25 eps minimum is mgmt's best optimistic guess and assumes their investments do not go lower from where they are now!
There's is too much optimism in this market now. It must be because novice investors and others sitting on big losses are believing what the brokers are telling them that November through March is the best time to be in the market. My older brother, a buy and hold guy, has lost about 2/3 of his stock portfolio, has had to take a loan from a bank and from his wife's relatives to meet margin calls, tells me that what the broker at Schwab told me. Since the tech market has been up the last several weeks, he now has about a 60k margin cushion between a margin call. Since he believes the time of the year now favors longs, he is daytrading with his cushion. This guy has never done daytrading before, but since he has the level 2 software that Schwab gave him, he believes he is totally equipped to do daytrading....what a joke.
Teresa Lo, a technical futures trader who used to a have a thread on SI, once said that "the stock market shall do the most damage" in the context of expectations.
Since almost everyone believed October has been the worst month, they buy a tons of Put contracts that mostly expired worthless last week.
Overall, this market is going to be in a sideways trading pattern until the economy begins to show some direction (up or down). Tyco is a great trading stock as our many others. This is a trading market, not a buy and hold market (unless you like to feel the pain of being underwater with your overnite positions or you bought them in 1958 and are still holding onto them (g).
Today, I made $700+ screwing around with the specialist manipulations of CRY, a beat up stock with optimistic expectations that the FDA shall allow them to fully sell their products again. This 4.25 stock had a low of 3.55 and a high of 4.55 today. Lot of movement for a 4.25 stock.
With TYC, I like selling naked Put positions on this stock at and below the 12.50 exercise price. This piece of crap is paying me back for the long position loss I took when I bought 1k shares at 30. As long as this dog stays above 10, I am happy cause most of my naked put contracts are at 7.50 and 5. At 5 - 7.50, I believe is what this company is truly worth, no matter how much their mgmt. screws up. The same is true of EDS & AOL, which I sold 7.50 naked puts for over a dollar plus.
I do not daytrade TYC because I have not been able to determine the specialist manipulation patterns on this stock yet. The only thing I have been able to determine with TYC is that it shall close on options expirations day at or close to the exercise price that shall do the most damage to Put & Call holders, whereby the most Put & Call contracts expire worthless and the brokers end up paying out the least amount of money. Right now, the Call to Put ratio for Nov is too optimistic with close to 64k Call contracts at 15 and only 13k Put contracts at that price. There is no way that the street shall allow TYC to close over 15 on Nov 15. With 17k Call contracts at 12.50 versus 29k of Put contracts also at 12.50, it appears that the brokers shall pay the least amount of money to option holders at 12.50 or between 12.50 and 15 if the same Put and Call buying patterns remains the same till options expiration next month.
Have a nice weekend.............Rob |
