What's all the fuss about?
The stock ran too far, too fast. It is coming down to its 50 week MA, just as it always does after a big run. (50 day MA is 85.) On rare occasions, it comes down to its 100 day MA. Sure, it would be nice to go up a half point a day, every day, but that isn't the way it works, at least not with stocks like Dell. We get big runs up, and big retracements, but the net impact is a steadily increasing stock price, when viewed over a long period of time.
There was a scene in the movie "the Groove Tube" back in the mid-70s. Two guys were driving along, getting high, feeling good. Then they heard a siren behind them, so they got paranoid and began to eat their stash. The cop passed them by, and they were upset that they had panicked. Some Dell holders get all happy and high for a while, and then they hear a siren behind them. They get all paranoid. Selling Dell because of a siren is like the two guys in the movie eating their stash. It's stupid.
Two months ago we would have been cheering to see a stock price of 90 by now; or even 80. We still should be happy -- not only are we at 90, we're 18 points below the all-time high. Can we drop to 80? Sure. So what? Where will the stock price be in a year or two. I have no idea, but 80 or 90 will be a distant memory.
It needed an excuse to drop. Robertson Stephens provided the excuse. Don't let the big boys scare you out of your stock. If your asset allocation can handle it, buy more. |
