What should I do?
I took a moderate position in SEG right before the earnings report, at 36 7/8, and have quickly lost about 1/3 of my money. I thought that 32 was the floor when I bought, and that opinion was confirmed when the stock bounced at that level, the day after those horrible earnings came out. However, since then, it has been very weak, and I don't know where the floor is. I am in the 40% tax bracket, and have lots of short-term capital gains for this year, more than my current losses in SEG. Today the entire tech sector is up strongly, and SEG barely moves. As I see it, I have two choices:
1. Stick to the original plan: hold till the cycle turns, and SEG is hitting new highs. This may take a while (1999? , 2000?, certainly not 1998). Avoid selling low.
2. Sell on the next brief upturn, probably get no more than 28, take my losses, cut my taxes, hold the cash till the next market downturn, and put the money into undervalued tech franchises (INTC, AMAT, BSX, AMGN). I had thought that the disc drive industry had become an oligopoly, and had learned to avoid price wars, but I guess I was wrong. |
