Rairden,
It was interesting to see the results of the scenarios that you
chose for dollar cost averaging of UTEK. For the period selected,
Jan 95 to Jan 98, the results you obtained were losses. Of course,
an almost infinite number of scenarios could be chosen. Some might
give a gain and others would provide more losses.
Since we can propose any number of scenarios, let me propose one. In
this case lets assume we take the same time period, but we are going
to trade in and out of the market by buying at the low points and
selling at the high points. Furthermore, lets assume we didn't make
a mistake in selecting the proper entry and exit points.
I "eyeballed" the UTEK chart from Jan 95 until Jan 98 and selected
several high and low points. Then I assumed a 1000 share investment
during Jan 95 at 20 per share for a total investment of $20,000. Now
I will buy and sell with the rule of always investing the profits I
make back into buying more shares. The results are shown in the table
below.
NUMBER SHARE TOTAL
ACTION DATE SHARES PRICE VALUE
BUY JAN 95 1000 20 20000
SELL SEP 95 1000 40 40000
BUY MAR 96 2222 18 40000
SELL MAY 96 2222 26 57772
BUY SEP 96 3398 17 57772
SELL JAN 97 3398 29 98542
BUY APR 97 5475 18 98542
SELL OCT 97 5475 32 175200
BUY JAN 98 8760 20 175200
The results are quite spectacular. By looking at the shares, they
have gone from 1000 to 8760, a really positive "8 bagger+". Also,
UTEK is now between 22 and 23 per share and probably on another
upward trend. Another one or two cycles of buy and sell, and you are
probably talking about some serious money!!<gg>
All of this scenario painting is nice, but the fact remains we can't
predict the future with certainty, so the above scenario is just
wishful thinking.
In my thinking, however, there is one general message to be gained
by looking at these scenarios, previous analysis of stocks in the semi
equip group, and trading vs buy and hold. Most of the semi-equip
stocks over the last three year period have not been good buy and hold
candidates. They make good trading stocks, however, because of their
volatility. The trick is to be good enough to pick em at the lows and
sell em at the highs.
My own experience with FSII matches what I have said about buy and
hold above. I bought a bunch of shares in FSII in June 96 at $13 per
share. Last Friday, FSII closed at $13.69. That's a gain of 5
percent in 20 months. Should have been in T-Bills!!<gg> |
