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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: JGoren who wrote (78114)	7/30/2000 2:38:07 PM
From: Jacob Snyder	Respond to of 152472

re: if you are nimble you can lower your basis When I started investing, I'd decide a price at which a quality stock was undervalued, and set a limit buy order for my entire position at that price. I found that, most of the time, I either got no stock, or bought at a price far above the low. So, I developed a different method, in an attempt to do better. The beauty of my current system is that it does not require me to be nimble enough to predict the exact bottom. Now, I decide when a stock is undervalued, based on the fundamentals. I start buying at about that price, and buy in increments as the stock hits new lows, or as it bounces on what looks to me like support lines on the chart. I am willing to sparingly use margin, to take advantage of these buying opportunities. Then, when the stock rallies, I sell in increments, to reduce QCOM to 20% of my portfolio. By selling, I have the buying power to take advantage of further dips in the price. And, when the stock stops setting new lows, I'm left with my long-term position. The weak points in this method are: 1. it requires watching the stock closely for a long time, especially if I start buying too early, or the stock has a prolonged "bottoming" period. 2. This method only works if there are no sudden "gap-downs" in the stock price, which would leave me fully invested at high prices, and unable to offload higher-cost lots without large losses. This is a risk I take. I try to avoid this by waiting until the stock is sufficiently out of favor, and at a low enough valuation, that new bad news causes only small downturns in the stock price. It has been reassuring recently, that QCOM has just moved to the bottom of its downward channel, rather than setting new lows, on new bad news.