Ron, that's a good question. I "forgot" to sell BMY and some others when they were at their highs last couple weeks. Probably because I sold some BMY when it was half of what it is now, so I've been reluctant to sell as it - and others - have been going up. Liked the ride, now I am seeing the other side.
Problem is that some of these large cap stocks sell for twice growth rate and for stocks I buy, I think even one times growth is too much. (I think the Fool boys' stocks with pegs of 1 are tooo expensive.) Result is I held because I can't figure out what true value is. If I knew I would've sold long ago -probably- and been onto something else- maybe.
I think when the downdraft hits, it will take most stocks with it. Value investing is something you either see or don't (per Buffett and Munger), so I'd expect people who get out of trendy stocks and/or momentum stocks to wait until they see new trendy/momentum stocks emerging, or to buy their trendy stocks back at lower prices. This seemed to work very well last year for semi's and stocks like AMAT, etc. As the market declines and these stocks become more attractive, many people in value stocks - seeing no movement in "dead money" value stocks, will try something else, for example getting back into the semi's at the lower prices (since that tactic worked once - and it may work again.) As more and more value stocks become apparent, investors will have more choices, so it will be tougher to see people willing to come into given value stocks... especially if one has a portfolio of value stocks in which some stocks are not outright buys now (they've moved up over the past months,years)and they're not outright sells yet either.
I try never to switch out of a value stock I own into a stock I think is a better value. I might buy the second stock, but if I sell the first, I've got risks working against me... the first stock moves up and I'm out of it; the second declines and I'm in it. Plus commissions, plus now I've got to rank stocks in the portfolio - and some of these stocks I don't expect to move for several years (e.g. OLS - which I've been wrong on... it has moved and I own it.) Once I get the mentality to switch, it becomes too easy. Report of bad news? why wait... sell and buy something better... there's always something better. Which I believe is true; it's just that I myself can't make any money in this twitchy, hop-about way.
CHER has had its best quarter this quarter... and the stock reflects it. There were times -- many times -- when the stock was at 10. Now it's about 16. Maybe it is undervalued; but to me looks like price reflects current good news and MAYBE future. If (when??) it gets back to 10 range, I'm a buyer. Seems like I missed the move and I'd be chasing at this point (price).
Paul |
