It's interesting the symbiotic relationship that value investors and momentum traders have. I think either strategy would be more "difficult" without the other. Ponder this scenario, if you will:
Let's say a stock is way overvalued in my way of thinking. Eventually enough people believe this that they sell or short the stock. This starts a down trend that momentum investors can work with, shorting or buying puts or whatever. The momentum builds, until the stock ends up being so undervalued that even I want it. People like me then start buying into it. The down trend dies out and reverses. Eventually an uptrend starts (after all I'm assuming it's a good company), and the stock goes through the roof again, becoming overvalued because of momentum, and people like me sell out at a big profit. Value investors make money, momentum traders make money. Momentum investors provide the "inefficiencies" that I can profit from, value investors start the trends that you can profit from.
This is why tech stocks are so much fun. The above happens so predictably, even for entire sectors like semiconductors. I don't trust my ability to play a trend, and you don't believe that valuations are meaningful. Because we disagree, we help each other make money. It's a funny world.
I have no doubt that the above process will someday again put UTR on my radar screen, so I too will keep revisiting it. (And next time I will to stay in much longer...normally I plan to hold for years)
Continued good luck to you too...
Andrew |
