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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Alan Siegal who wrote (38103)	10/11/2000 9:32:19 AM
From: Sun Tzu	Read Replies (2) \| Respond to of 70976

if you buy on the upswing, how do you know it's the real thing and not a dead cat bounce? The same way that if you buy down you know you are within 5 points of the bottom; you don't! When I buy stocks, it is because I expect them to go up. Now if I had an infinite amount of money to invest, then as you've pointed out the actual outlay may be the same for buying on the way down or up (ignoring interest loss and opportunity costs). But if I were to buy on any 5%~10% drop and the stock went from 3 digits to 20s (as many have) then I'd be out of money long before the bottom was reached and I would have to wait and hope for substantial gains before I broke even. On the other hand, if I were to wait for some stability and buy on the way up, even if I bought into a dead cat bounce (which at most would happen only once or twice)I would still have more funds on hand to take advantage of better opportunities. Also, when you buy on the way up, your gains on the stock provide you with more buying power to take advantage of opportunities. One last thing, the bottom may be too low and the turn around may be years into the future. Buying on the dips may leave you holding the bag for a long time (may be forever). I am not saying this is the case for AMAT. But I've seen many companies, some very big and very reputable, whose simple mistakes combined with changing environments devastated them. good luck, Sun Tzu