I noticed that DELL is trading at a very high multiple
of its book value. Is there some sort of hidden asset
off the company books?
And why are they borrowing $500B when they have so much
cash in the bank already? Are they getting ready to
make an acquisition? Acquisitions are usually bad news
to the purchasing companies stock price, as it always
has to purchase the other company at a premium. But I
can't see why else DELL would be borrowing money.
NSM announced bad earnings, (decrease year to year with
declining margins). Should be good for DELL, as another
supplier will be reduced to selling parts at distress prices!
By the way, one of the useful things about buying stocks in
an account with only one stock and at maximum margin is that
if you make a mistake, the margin calls are a wake-up call
that indicates that you bought at the wrong time. For a
trader, the worst thing to have happen is to become a dreamer.
Margin calls will wake you out of your dream, so you can learn
from your mistake, and move your money on to something more
profitable. To lose touch with reality is the most common
downfall of the stock speculator. In day trading they call
it going into "prayer-mode". :)
In my opinion, long term buy and hold types probably should not
use margin, but short term speculators should use it to the
maximum, unless they are wealthy enough that their positions
challenge the liquidity of the markets they trade in.
(I.e. Warren Buffet already moves the market too much. There
are plenty of non-DELL stocks that have small enough liquidity
that a little guy like me can easily account for most of the
shares traded in a day, for instance, MRIA) In either case,
remember the trading rule: "Keep your losses small and let your
profits run."
-- Carl |
