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Technology Stocks : Dell Technologies Inc.
DELL 133.78-0.1%Nov 14 3:59 PM EST
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To: rll who wrote (82278)11/25/1998 8:49:00 AM
From: nihil  Read Replies (2) of 176387
 
re: diversification

I understand the theory -- it is a way of guaranteeing mediocre performance for the faint of heart. It is based on portfolio theory that assumes (but cannot prove) that return and variance must be inversely related. Look at the Dell, MSFT, and INTC 5 or 10 year charts (among others) and tell me if you believe that return and performance are inversely correlated over periods of a year or so. Eventually all, like IBM of old, must munch the bullet, (else they would absorb all available funds), but it is foolish to avoid such stocks -- with promising underlying fundamentals -- until that time occurs and it is often forewarned by a decline in revenues, margins, and profits. One or two quarters don't make a warning. None of this applies to stocks that are selling at 100 times sales.
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