>>What bother's me, is that my ORCL is my margin stock and I had to
>>sell something to cover my margin.
One thing to be very careful about hi-tech stocks (especially if holding them on a margin basis) is that they often have periods of very large run-up (50-150%), followed by a period of consolidation before the next run-up. This is true even if there is no fundamental bad news. During the consolidation period, drops of the peak may be 25-50%. For Oracle, I would figure a reserve of about 1/3. In this case, that means that you should be able to handle a drop to near 30.
The other thing you need to worry about is the U.S. economy. About 40% of Oracle's sales are here, and no other country comes even close. So economic news is very important, and must be considered. In particular, there is some worry that the U.S. will not be able to maintain itself over the next 2-3 years (moderate growth of 2-4% and very low inflation). For example, I saw in this morning's paper that the core inflation rate for September may have jumped to 0.4%, which is much above recent numbers. This will lead to more jitters in the stock market, and probably another bad day (on top of the recent Greenspan warnings).
Allow reasonable room for bad news, and in this case, be prepared for another $3-6 potential loss (I am not predicting it, but saying that I consider it a reasonable downside risk). Remember that all stocks do not always go up. Even the best come down somewhat at times. |
