Cary/Bob, I think you are both right, but with one big caveat! You have to define your time frames, when you buy and sell, and in general are you talking about being a "long term holder" or a "shorter term" holder.
Just to introduce you to how things can change with time and over what periods you buy and sell, go to the following and do some graphs using different lengths of time and different times of buying the stocks in question. I chose 4 stocks just as an example, AMAT, KLAC, COHU and LTXX, but obviously any other stocks can be substituted.
moneycentral.msn.com
Just look at all time frames of 3 month, year, 3 years and 5 years. On the 5 year chart, LTXX gained about 1900 percent from Aug 1998 to March of 2000, far dwarfing any gain by the other 3 stocks over that time period. Then go to the "year" chart and now LTXX is on the bottom compared to the same 3 stocks.
In general, the "good" second tier stocks have a higher beta than the big, strong leaders like AMAT and KLAC - like they say in the song - you just have to know "when to hold em and when to fold em"!:)
Don |
