Jim, I was actually talking about Whittington, who was calling for $17 in eps in 1998. I guess a negative $1.20 is close. <G>
The key is: don't short. Buy puts. That is why, even though I continued to buy puts on MU when it was only 200% overpriced, and it has since run to 900% overpriced, the winners swamp the losers. I can only lose 100% when the herd goes insane on a crappy co. I make several hundred percent when they get a dose of tough love. My net so far on MU after about 80 trades this down cycle is +2100%, not counting my current positions.
And, of course I go after the overpriced junk that is currenly called industry leaders. They almost all fail eventually and when they do, you make mega bucks. Intel, Dell and Compaq were industry leaders and they crashed big time last Summer/Fall. Had I owned puts on them, instead of 25 stocks that went down much more, the fact that they have come back doesn't mean I would have to give the money back. I tend to avoid the ones the blundering herd loves most until I see their businesses starting to crack a little before totally falling apart and nobody recognizing the signs. Ain't happening at Lucent and Cisco and Microsoft, though I do see Cisco and Lucent cutting each others' margins in the future. It is happening at Intel, IBM (this isn't really fair to include them with these good cos., as they are a POS that never actually came back. They just started using "aggressive" accounting) Dell and Compaq.
Here is my current put list, though stuff comes and goes quickly. An asterisk * indicates a rolldown from a higher priced put (I usually roll after a quadruple): Fannie Mae, CDWC*, Intel, Novellus, First Union*, Cisco, Ascend, Micron, Freddie Mac, IBM, Solectron, Jabil, Sanmina, Home Depot, Schwab, Dell, Compaq, Linear Tech, Merrill Lynch*, The Gap, EMC and Xilinx. Some are 2/3 positions and some are 1/3 positions. Net, net, I am about 2/3s of the way through with filling my second third.
MB |
