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Technology Stocks : Dell Technologies Inc.
DELL 120.60+1.8%Jan 9 9:30 AM EST
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To: freeus who wrote (18070)10/11/1997 7:58:00 PM
From: Chuzzlewit   of 176387
 
Freeus, it seems to me that there are only three reasons to sell a stock (other than you need the money) 1. The nature of the company is such that it no longer fits in your portfolio (e.g., you are looking for more conservative investments as you get closer to retirement age); 2. The underlying growth story or the fundamentals have deteriorated; and 3. The stock is grossly overvalued. The last of these is the most difficult to asess because there are no really good yardsticks for valuation. Some people believe in selling when a stock loses a certain percentage of its value (typically 12%-15%), but this makes no real sense (provided you've done your due dilligence and the fundamentals are intact). Had I followed that rule, I would have exited a number of positions that become quite profitablein a few months. For example, I bought CA at $44, it dropped to $38 (we're talking February-March 1997 here). Today its in the high 70's, and I expect it to be trading in the 90's in a few months. I bought MCAF at $72 3/4 and the stock dropped to 48 1/2 (very scary!). Instead of selling my position, I tripled it couple of weeks ago and brought down my average purchase cost to 56 7/8. Today it's at about $64 and I expect it to see $80 before too long. I kept these and other similar positions because the fundamentals remained intact and both stocks fit into my aggressive growth strategy.

The bottom line is selling stock on the basis of price momentum can be a disaster.

Regards,

Paul
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