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Technology Stocks : PALM - The rebirth of Palm Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Andre Williamson who wrote (3263)	1/3/2001 11:06:32 PM
From: Mang Cheng	Read Replies (1) \| Respond to of 6784

FNS, Palm is an extremely high Beta stock. It just swings with the Nasdaq index. The index drops 5% it can drop 12% ! The same thing will occurs on the way up. If nasdaq is back to 3500, Palm should reach $50. I'll set the low-end at $20 and high-end at $50 and trade my holdings in between. It won't be a straight line up for sure. My tradings were way off last year since I didn't realize Palm could drop to as low as almost $20 with no profit warnings and the like. It's a really good lesson. Mang

To: Andre Williamson who wrote (3263)	1/4/2001 9:15:00 AM
From: David E. Taylor	Read Replies (1) \| Respond to of 6784

Andre/Sunfish: I appreciate your responses to my post. My strategy since the PALM distribution last July has been to hold the basic PALM stock I received as a core holding, ignore the ups/downs, and use the "trading range" as it developed to buy short term calls near apparent bottoms and sell them near apparent tops. Out of six option trades, five were doubles or better (two were triples), and one was just under break even. I sold the last option position out as PALM hit $56 before earnings. None of those options positions had a lot of capital at risk, but I did much better than I expected to off them. While that's been a profitable approach thus far, the core LTB&H approach has been a bust. While I knew the $67 high when PALM went into the Nasdaq 100 was a clear momentum driven overbought condition and a clear sell signal (I sold two sets of calls right then), I held the shares, because I failed to anticipate or even consider the possibility (despite WLD's warnings) that PALM would drop all the way to $32 or so. I likewise ignored the sell signal at the $57 pre-earnings level (where I sold my last calls) to our current low $20's, which is about my cost basis. The drops from those two highs alone - which I was savvy enough to use to sell calls and profit nicely from - amount to over $600k in paper profits on my core PALM holding, and let me tell you, though I have a strong stomach for the wild swings in tech stocks, that kind of drop is enough to make me seriously re-consider how I handle this PALM position in future. You both may well be correct that we are in for a sustained up trend in the market and in PALM, and that trying to trade the swings may not be productive - my own experience trading CSCO/DELL in one account vs LTB&H in another between 1996 and 1999 taught me that when a company is in a sustained revenue/earnings growth phase, it's tough to beat the LTB&H approach. But I'd be foolish to believe that PALM will not continue its wild swings over the coming year - Mang is correct, PALM is a high beta stock, and will remain so until its bottom line earnings growth matches its steady and impressive top line revenue growth. That's why I have my trader's hat on for PALM, for at least part of the position, as well as continuing the options part of the strategy. JMO. David T.