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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (162392)	10/26/2000 11:52:06 PM
From: calgal	Respond to of 176387

Remaining calm and hanging in there in this Bear atmosphere takes a lot of patience, discipline and faith. :)Leigh When to Sell: Discipline Over Emotion By David Edwards Special to TheStreet.com 10/26/00 2:49 PM ET Deciding to sell a stock is much tougher than deciding to buy one. If you're selling at a loss, you may be psychologically opposed to "realizing the loss," because it means you made an error in your analysis. If you're selling at a gain, you may be unhappy about the taxes you'll owe, and you'll be second-guessing yourself about whether you left money on the table. Successful investors, therefore, have to develop a discipline about when to sell a stock. Here are rules we apply to our client's portfolios. Rebalancing In a diversified portfolio, consider selling half of any position that exceeds 10% of the portfolio. Typically, we initiate a position at 2% to 3% of assets. If a stock doubles, triples or quadruples in a short time frame, the position can grow to a large percentage of the portfolio. If we had kept every share of Dell Computer (DELL:Nasdaq - news) we ever bought starting eight years ago, we would have had about 35% of our clients' assets in that company by January of this year. This is fine on the upside, but horrible when a big position takes a big tumble. No matter how good a company is, the stock eventually will have a substantial pullback. Disagree? Take a look at the Microsoft (MSFT:Nasdaq - news) chart. By automatically cutting back on positions with big runs, we pay some taxes on the realized gains, but we avoid the risk of a substantial hit. The same discipline applies to sector concentration. By the end of 1999, 40% of our positions were in technology, reflecting the huge rally in technology stocks last fall but exceeding our target of 25% for that sector. We shifted 15% of these assets to financial services, a sector that performed so poorly in 1999 that our exposure had fallen to 11% from our target of 25%. This shift did nothing for us January through March, but totally paid off for us in April and May. Consecutive Earnings Misses When a company fails to meet earnings estimates two quarters in a row, it's because management doesn't have a good handle on the company's prospects and has given poor guidance to the analyst community. In our minds, Xerox (XRX:NYSE - news), Lucent (LU:NYSE - news) and Motorola (MOT:NYSE - news) are candidates for sale following recent misses. Earnings Restatements Any company that has to restate its earnings is an automatic sell at our firm. An earnings restatement says the company's management has no idea what the company's true financial condition is. It's like flying a plane in the dark with malfunctioning instruments. Sunbeam (SOC:NYSE - news) restated its earnings three years ago. How's this for an ugly chart? thestreet.com