I bought 150 shares of Adobe at around 50 and sold it at around 42, because I felt there was more downside at that point. Thus, I booked a loss of about $1200. I put that money into EMC, which was selling off at the same time and had dipped to 25 1/2, from a split-adjusted high of about 32. I am more familiar with EMC and felt that it had a greater chance of bouncing back from 25 than Adobe had of going up from 42. This is sort of a "trading up" strategy, selling the weaker of two stocks when both are down and thereby booking a tax loss, while ending up with a stock that has superior prospects. So far, this looks like a wise decision, since EMC has held steady at 25, while Adobe has continued down another 5-6 points.
The major risk is that EMC shows a slowdown in orders due to general tech malaise, but as of December 31, 1996, only 6 percent of their sales were in Asia (30 percent in Europe-Africa-Near East, the rest in the Western Hemisphere, mostly in the U.S.). With that low level of Asian exposure, I don't see the Asian contagion having much of a direct effect on their bottom line. (They report in early February, I think.)
Returning to Adobe, in fact, I think Adobe looks very attractive at 35-36. However, I just got burned and want to watch it for a while before I feel comfortable buying it again. My first purchase was an impulse, and I got properly whacked for my lack of research. So, while it may be a bargain at these prices, I'll hold off and just learn from you guys for a while.
In the meantime, good luck on your holdings, Dave.
Cheers
Chuck Edwards |
