to Rich Evans: Have been mulling over your question as to take profits -or at least some profits- now. I think you raise a very good question. We are talking about a stock that's gone from about 23 to about 63 in what, maybe a month? Sir, I have held stocks for a decade that don't generate those 40 point gains. And maybe the stock will double yet again from here. To me though, with the stock hitting new highs, upgrades and recommendations all coming forward -- all the good news is already out for any buyers.
Maybe it's got something to do with guts though. Those guys heavily on margin with tens of thousands upon thousands of shares,-- well they wouldn't have got where they are without some great confidence in FLEX (or in Paul K -g-). The outlook for great success for FLEX the company has been strong since I've been following it. But I still recall at least two opportunities to buy the stock - as much as you wanted or as much as you dared - in the low 20's. Who's to say that that opportunity won't occur a third time?
On the HADCO, thread someone posted to me-- when I bemoaned that my position at 40 was decimated down at 20... something like "well sure, everybody knows that the company is suffering...We all bailed out last month." So I am suspicious. If FLEX takes a downturn, it wouldn't at all surprise me to see a post from one of the big players saying something similar like, "oh well, we mostly sold at much higher prices, now we're buying such and such". That is, the enthusiasm we see now, I just wonder how enthusiastic some of these margined guys will show if FLEX retraces 50% of its gains.
I'm in favor of trimming outsize positions. Obviously for someone who's spent tons of time researching a particular company, that is very painful and hard to do-- especially if one only holds 4-5 different stocks. For someone who is an investor and who is concerned with overall risk in a portfolio, I do think though that trimming a position is a viable option. Of course you are reading this from someone who's lived through '65,'67, '73-74, '87 -- (survived, but not very well -g-)-- someone who - in my own opinion - may be fighting the last war. I'm trimming my position in FLEX today. I've also been trimming my long term positions in Bristol Myers, Abbott, Sun Microsystems, and a Warren Buffett special. To my chagrin, these stocks all (FLEX too soon to tell) keep going higher and higher. But at some point one has to sell down to the one's sleeping level. Some people think that the higher the stock goes, the more confident and secure they can be in their assessment. Maybe that's true, and IMO, maybe not. Maybe the Warren Buffett's buy right-and-never-sell is the correct approach. But to me, FLEX is a company with no particularly strong moat. I'm taking some off the table. JMO, and as I say, I've been wrong many, many times before. Paul Senior |
