Pham-
That's a good question. I suppose it might be interpreted as a lack of foresight. But I was shocked by the extent of SMTC's correction. Although I said at the time that SMTC was fairly valued, it was trading at half the valuation of its peers. Also, I knew that SMTC's business was (and is) very strong, and that their acquisition of Edge was an excellent move, and that they would report a great Q3.
It wouldn't have suited me to sell at that point, because unless I could buy the stock back at a 30% discount, I would have to pay a lot of that gain in taxes. I don't let tax considerations determine my investment decisions, but the % drop in price has to exceed my tax rate in order for the trade to be worthwhile. Basically, that means that I didn't expect SMTC to drop 50%. I still think that the stock didn't deserve to be cut in half (or at all, really).
In retrospect, though, I would have sold if I had known how much the stock was going to drop. But then, I wouldn't be an analyst, I'd be a fortune teller. I'll tell you how to build a fortune. Its by buying stocks like SMTC when they are depressed (and perhaps selling some when they are fairly valued).
I see this correction as a tremendous buying opportunity for current and potential SMTC investors. That's why I've since bought more at $25 and at $17.
Todd |
