Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: American Spirit who wrote (20396)	2/13/2000 1:17:00 AM
From: Rande Is	Read Replies (2) \| Respond to of 57584

Spirit, a few thoughts. . . First, take a look at our YTD Long port from Jan 1 of 1999. . . look at how many stocks are up well over 1000%. . . then look at the value plays in the port. . . after a year, they are still down. 33 stocks up nearly 500% in 14 months. . . and that is with 9 stocks DOWN over 20% each. But its the ones that have risen and split and risen and split that have shown the most incredible gains. . . in the thousands of percent. . . . techstocks.com [via Classic SI only . . . . tell me if those in Classic cannot access and I will spell it out]. . As for interest rates, the way the bonds have been crossing, it wouldn't surprise me to see the Fed reverse its bias. . . throwing a surprise at everyone. . . we really don't need the hikes from here. And as for what to do. . . I don't think the beaten downs will get much more of a beating with the Dow having corrected 11%. . . and I don't believe the bearish hype. . . instead, I am buying into the weakness. . .and took my usual positions in the issues that ran the hardest and fastest when the market took a slight bounce a half hour before closing. But with the trading of late. . . you must keep close watch and/or tight stops. . . things can turn on a dime these days. . . no warnings. The only advice I will offer is that when you make a double or triple on a tech stock. . . try not selling the whole position. . . but rather start "collecting free shares". You can throw them into another account or even call for the certs, just so you don't get tempted to trade them. Over time, this will provide some tech balance to your value plays. Keeping the smallest amount of CIEN, QCOM, CSCO, SUNW, etc. would have kept you from value losses. . . since these techs and value plays tend to move in opposite directions. This time around, perhaps some LPTHA or that UIS you had a while back or JDSU or something. . . once you start getting some free shares. . . try designating a part or all of the gain to your tech investment port. Best wishes, Rande Is

To: American Spirit who wrote (20396)	2/13/2000 1:53:00 PM
From: DlphcOracl	Read Replies (1) \| Respond to of 57584

American Spirit: You are starting to sound like Barron's Alan Abelson who, for the past five years, has been opining that "the technology stocks are overvalued and can't POSSIBLY go higher, they are due for an inevitable, severe correction..blah,blah,blah,". Can't go higher? Oh, yes they can. William O'Neill of Investors Business Daily has it nailed down; he couldn't care less what the P/E is or what the market cap is; he is concerned with, and his newspaper is focused on identifying, WHAT INVESTOR'S ARE BUYING!! Ultimately, this is what determines how an investment behaves. Another investment mind that has "got it right" is Robert Loest, Ph.D, who manages The Millennium Fund. He recently appeared on CNBC regarding his unusually frank risk disclosure statements and his words just flowed like pearls. His premise is that this is NOT a bubble but, rather, a sea change. In short, the nature of risk in the stock market has changed because of a rapid change from an industrial-based economy to an economy based on intellectual capital. During an aging, slow growth, mature industrial economy, there were NO super-growth companies growing at 50%-100% per year to make up for mistakes in one's portfolio. His point is that 50% corrections in many of these newer companies are NORMAL! The risk is not that you pick a stock that drops 50%, the risk is that you AREN'T in those companies that are growing earnings at 100%+ a year. If one of your stocks tanks and drops 50% you can make it up on another company in several days and your portfolio is (or should be) filled with them. Bottom-fishing and "value" investing is all right in spots, but a steady diet of this is a recipe for portfolio disaster. Picking beaten-down stocks that have shrinking profit margins and slowing sales, stocks in hyper-competitive sectors with little pricing power (retailers like ANF, etc.), and tech stocks that have dropped because they have lost their way (Compaq, IBM, Lucent) just doesn't cut it. Yes, EVENTUALLY, they will make you money, but at what cost -- you will have to wait an inordinate amount of time and the money can be better invested in the market leaders. In short, you are diverting money into losers which can (and should) be funneled into winners. Opportunity lost is money lost. My (unsolicited) advice: if you are fixated on value investing, you must think more carefully about sector analysis and look for stocks that have been beaten down because they have been misunderstood by Wall Street and have been subject to investor overreaction instead of buying stocks which are merely cheap, with eroding profit margins and pricing pressures (Dell, retailers, etc.), or stocks which have lost leadership position (IBM, Hewlett-Packard, etc.). Some good recent examples of what I am talking about: Tyco Int'l (TYC); Legato Systems (LGTO), SanDisk (SNDK), Aether Systems (AETH), and GBLX/MFNX from last Fall. THESE are the fallen angels you should be looking for!