Kent,
I was just reading the latest (Mondays) edition of Investors Business Daily this afternoon. On the front page, in the bottom right hand corner, William O,Neil, founder of IBD, was interviewed about investing. Apparently, this will be a series of columns featuring his views. He was asked today - what is your most important rule in investing. He responded - when you buy a stock, set a stop price 8 percent below your buy-in price. In other words, preserve your capital. Probably a very good idea, but I don't think it would work in the semi-equips. These stocks can easily bounce around 10 percent in a single day. I think a person would have to do as you suggest - set the limit based on the beta of the stock. Twenty percent is probably in the right ballpark for these stocks.
As to when we are going to have good news - I think it is going to be awhile, but I keep hoping the coming earnings announcements will have some ray of sunshine to get the group turned around. Even though I hope it is true, I must say I think it is going to be in the summer of 1999. Then we are likely to have another period just like we did in 1997 when the group essentially doubled from April to September, a period of 5 months. You have to keep your powder dry, because when this group goes, it takes no prisoners! A person blinks twice and by that time - its all over! Then at the end of the 5 month period you sell, put your money in Coke for 2 years and repeat the process all over again.:)) The trick is always to catch the new "wave". |
