Forced selling--Indeed, that is what I need since when a stock's price goes up significantly I'm always looking for a bit more until it suddenly collapses over some unfortunate event--then the price starts going down and I keep hoping to catch it near the old high. In the case of a market decline it never goes back and I wind up with a bunch of clinkers in my portfolio. So, like you, I force myself to sell by gambling early as the price goes up.
Back in 1999 I had about 600 shares of QCOM at $40 to $50 as the price started up. When it had tripled I sold 2 calls at $120 for $16 as I recall. Though the price went up 10 times more (there was a 2/1 split in there someplace before the 4/1 in 2000 I rarely suffer remorse for having taken that early profit. Not great to reminisce about, but not painful either. After the 4/1 I sold a batch at $160 and more from $120 down to $80 through 2001. But that $80 was on $5 cost basis already.
I learned a good deal about EPS and what to watch out for in various situations back in 1970 getting my MBA. The Financial Standards boards make every effort to require fair presentation but different types of business are set up to game their best efforts. As long as one knows what to watch out for, I find EPS (not adjusted) to be quite adequate. But if I were not aware of the legitimate pitfalls, I suspect I'd find cash flow more reassuring also.
One more thing I'd like to talk about: I hear all the complaints about not having the PE of NVDA or Nokia or Lucent (in the past), but QCOM is in a very different game. They built phones and installed infrastructure when they had to, but got out of manufacturing as soon as they got others interested. They decided they wanted to be engineers on the bleeding edge of technology and as such I fully expect them to have hiccups over things like Mirasol. They have to try and make mistakes in order to do their game plan. And for that a PE from 10 to 30 is plenty in my opinion. I'm getting nervous now that we are about 25 because, even though QCOM has returned well over 12% EPS for the last 30 years, one major screw up could be really painful. I worry about MediaTek but not about Apple or NVDA or AMD.
It looks reassuring that they are trying their wings in other markets now because they have become vulnerable in cell phones I think. And I'm not quite so sure of the newer engineers now that the last of the Jacobs, Viturbis, Antonio ??, and Gilhausen's, (and another couple I don't think of) are gone, some of the old idealistic spirit has been lost perhaps. |
