Lawrence,
It pleases me to read your very well thought out post.
Getting us to continuously reevaluate the negative issues relative to our investments, especially when those issues are as well structured and presented as yours, is always welcomed.
However, I think that most of what you have posted, although the specifics may vary, could be said now for the majority of large cap DOW stocks. Since the DOW is up more than 10 % in just the last 2 months, I am sure that you could find similar arguments for most of the stocks that have run up recently along with the DOW. Therefore, I believe what you are really advocating in your post is a switch from companies which have participated in the run-up, to those small cap tech stocks which not have. Certainly such a strategy has merit, however, I would like point out that I had advocated a similar course back in December. Then, as now, it appeared that many stocks were moving up on "irrational exuberance". If you recall, I posted then on the Intel thread, that I had sold Calls on 10 % of my Intel core position. Later, I bought back those INTC Calls at a good profit, and bought IBM Puts as a cross hedge strategy, instead. At the time, and as recently as last week, I employed the same strategy for precisely the same tax implication reasons as Paul so astutely pointed out. In addition, had I sold all or most of my Intel stock at that time, I would have missed the move from 75 to 88 in INTC, a gain of almost 18 %.
Lawrence I have no argument with any of the points that you have made. I believe however, that much of what you are saying is already priced into the stock. Therefore it is up to each individual to evaluate their own risk/ reward tolerance, and what degree they are willing to assume. It was for this reason that I expressed similar concerns, as you, in my post of June 9. It was right after Intel issued its lower revenue expectations and after I returned from the NY analyst's meeting.
techstocks.com
In that post I anticipated the current situation you talked about and wrote,
"So now I ask you the reader, what will you do? Intel I think in the short term may go down. I perceived that most of the other analysts there will focus on what will happen in the next quarter, or possibly even the next two. However, there was, and is, no doubt in my mind that everyone acknowledges that Intel will be successful in the long term. What I want to know, is given that understanding, how can these analysts be sure that if they recommend a neutral rating on Intel, they will be able to get their customers back into INTC in time and before it runs up?"
Thanks again for your well presented post.
Regards,
Jules |
