FWIW, I recently bought more of both, too.
I also bought more (read sold more puts) Amgen. Company raises guidance after beating EPS estimates. Shores up defences against nearest competitive threat. Sells off anyway, chiefly on concerns that lead products are overdosed. Should be priced in by now, and I agree with Cramer; it's too cheap. Cramerites can't really move something as big as Amgen, though. I guess it's the only pharma I own.
I would have responded sooner, but I've been on the road, and time for posting was limited of late. In general, buying strong companies that over react to secondaries has been a profitable strategy for me since sentiment hasn't been excessively bearish since late spring. I think it'll work still, but am concerned about market toppiness. I think it'll flail about for a few months, making the sale of time premium a viable strategy for a while longer, then do the classic spring to fall swoon. In '07, I hope to capture more profit from that idea if it's right than I did in '06. In '06 I merely hedged with sold calls. That wasn't enough. I needed to either hedge with deep in the money calls or just sell most stuff and buy some index puts. Then ignore for a few months and go climbing. Start buying in August such that I'm fully invested in September. I've had a decent year despite a couple of regulatory setbacks, but had I executed the "sell in May and go away" part, I'd have done twice as well.
Since I see a repeat, I vow to do better next year.
Does that strategy harmonize with the hopes for low turnover in this portfolio?
Cheers, Tuck |
