| | | that is a scary looking forward projection for MU. do you feel that the analyst consensus is off?
It is wrong and essentially useless. Even worse it is misleading. As Sam has pointed out many times, this is a sector that can change in a hurry and the analysts have trouble predicting a year in the future let alone 5 years out. I whole heartedly agree with that point of view, however my point is that just the posting of that type of scenario from both Yahoo and Zacks is bad for the general investor psyche.
Investors overall have many different time frames they can be interested in all the way from day traders, short term, medium term, and long term and long, long term. Many are probably in the "medium" term. Again though, lets concentrate on Micron. Just look at the chart just posted. Micron was selling for about 5 dollars a share at the beginning of 2013, it went to 30 a share by the end of 2014, a gain of 500%. Then Micron goes to 10 dollars a share at the end of 2016, a loss of -70%. Then Micron has risen from that point to about 32 dollars a share now, a gain of 220%.
I can even develop a scenario even better than that. Suppose 1000 shares of Micron were purchased in 2013 for 5 dollars a share($5000) and sold for 30 a share($30000) in 2014, now I can wait until 2016 and invest the $30000 in Micron for 10 dollars a share(3000 shares), now I can sell for 32 dollars a share and have $96000. So from early 2013 to now, about 4 1/2 years later I have made $91000 on a $5000 investment(1820%) and I only made 3 trades($20 dollars in trading costs?)
The point I am trying to make is, what if you were a "medium term" trader like many people who have many demands in their life doing other things, but you looked at the market enough(weekly, monthly) and were very aware of "cycles" in the market and certain individual stocks like Micron. You may very well do what many of the article writers argue is the prudent approach and sell Micron because the top in price is near and I can buy it in another year or so. After all Yahoo and Zacks consensus is earnings are only going down from here. Now here is the "kicker". Let's say I wait until Micron hits $10 a share again and I take my $96000 and buy 9600 shares of Micron. Now I wait another year of so and I sell it again at $35 a share(inflation you know). Now I have $336,000 from a $5000 investment(6620%). Now I am a happy camper because I played a cyclical commodity stock in the "correct" manner?:-)
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