WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 157.75

+0.4%

Nov 14 3:59 PM EST

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To: Jason Rooks who wrote (1846)	11/26/1997 10:44:00 AM
From: Mike Winn	Read Replies (1) of 60323

Jason, I am basically a fundamental investor but lately, I start to use some TA or at least look at the chart to do my trading. TA is a statistical tool used to determine the trend of a stock based on previous performance. The principle behind it is no different from the economic indicators used by the government to decide on the interest rate for instance. But TA alone is not adequate because past performance does not always warranty future performance. TA cannot predict the Asian meltdown, nor it can predict the bearish statement by the CEO. It cannot predict the tremendous revenue for Sandisk generated by the sales of CompactFlash in the first half of 1998 and the MMC in the second half. But it gives you some indications of whether people are currently selling or buying. The problem with stock is people tend to assign arbitrary valuation to a stock. Given similar earnings and growth potential, a stock can be assigned a PE of 20, 30, 40, 50 or as high as 700 in the case of RMBS. So if you have a stock with a PE of 40 for instance and there is strong sign of selling, then you better get out before it get cut in half to a PE of 20. People also invest emotionally. For instance, if you're investing in a chip gear company with tremendous growth and the whole chip gear sector is weak, then you better sell also. TA will tell you that that there is strong selling indication. Similarly, TA tells you when there is strong buying indication. But TA is just another investing tool and you need to use it in conjunction with fundamental research and economic knowledge. My 1/2 cent. Mike. P.S. Here is the post of a "victim" of pure fundamental investing: 207.183.153.206

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