Gottfried, I came across this on the Qualcomm thread and thought it might be of interest. I agree with this guy 100%. for what that's worth.
"One this thread, the following may cause me to have my head handed to
me but:
Chaz you wrote:
>>As long as the specific stocks you hold (certainly not mutual funds
where you are helpless to use your own judgement IMO) are chosen
carefully, I for one have found that selling only when the fundamentals of
the individual stock change or to buy a better opportunity is preferable
to panic selling or wasted efforts at
"timing".<<
First of all, let's do away with the Catch-22 phrase, "are chosen
carefully." Stocks that go up after you bought them were chosen
carefully. Stocks that go down after you bought them were chosen
poorly. Right?
Now, about holding until fundamentals change. That is one of the biggest
mistakes an investor can make. The market anticipates. It anticipates
and prices in that anticipation LONG before you get the news. Let's take
the drillers this past year. Their correction began in October '97 and has
yet to stop. Many of the best drilling and oil service companies in the
world are down 50-80% from their highs. Now here is the fun
part...NOTHING, I repeat, NOTHING changed in the industry's fundamentals
until April when a few companies started to "warn" investors about oil
price concerns. And then it wasn't until May/June that we actually saw
day rates on rigs fall. By that point, most of the stocks had lost 50% of
their value.
Some of the reasons to hold these stocks for the "long-term" were
similar to Qualcomm. But specifically there was going to be a growing
demand for oil because of population and economic growth. Oil is
ALWAYS going to be used and there will eventually be a shortage. The oil
industry cycle went in 10-12 year spans and we were only 2 years into
the current one. There was a shortage of rigs and the lead time to make
more was nearly 2 1/2 years. Most of these companies had weathered oil
depressions before and now they were mean and lean and flush with cash.
Blah, blah, blah.
Now don't get into the fact that oil is a commodity and is cyclical and
etc. Everyone knows that...but the trick was no one believed it anymore.
Economic growth is cyclical too...but no one wanted to believe that until
about 3 weeks ago.
Chaz. Yeah, you bought Cisco. Good for you. But would you please share
with me how many stocks have held up as well as Cisco until this last
Thursday? Dell, GE, Intel, MSFT? Out of 8,000 + stocks, that isn't much.
But you also bought Qualcomm. Hoping not to offend anyone here, QCOM
has been one of the worst investments one could have made over the
past 4 years (unless you traded it). From late 1995, the stock has gone
NOWHERE! Why? It was overpriced in 1995 and is just now catching up
with itself. How do I know? The market tells me so. And don't bother me
with the perspective that the market is wrong. People make careers
fighting the market and losing their shirts.
Should you have continued to hold Cisco since you bought it? Now we
say yes. How about in 1997 when it took it's plunge? Had I owned it, I
would have sold the second it broke it's downtrend...and bought back the
second it's uptrend continued. You say, that is market guess work and
trickery? O.K. fine. All I can tell you is that I am here today investing
with capital because I listened to what the market was telling me and I
cut my losses based on what the market said. Had I held on to many of
my older positions, I would have been broke. I know many others in the
same boat.
We have ALL been spoiled by a bull market in which tellers at Home
Depot have become millionaires and it is hard to find a market
commentator that doesn't say "buy the dip." The fundamentals of the
world are CHANGING and the market is telling you something. This is NOT
like all the other little corrections we've had. Ignore it at your own peril.
Godspeed,
<H> |
