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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Prognosticator who wrote (41989)	3/13/2001 11:21:15 PM
From: David Howe	Respond to of 64865

P, I agree with and understand your investing strategy. It's similar to mine. Hopefully it will bear fruit. IMO, holding high quality companies for the long term (especially considering today's prices) is the proper decision, even if it doesn't pan out. At least we will be able to look back to today and say we made the correct decision. If we were to sell now and the market were to perform reasonably well over the next 10 years, we'd have to look back and say that we'd made the wrong decision. IMO, Dave

To: Prognosticator who wrote (41989)	3/14/2001 9:00:08 AM
From: Stock Farmer	Read Replies (2) \| Respond to of 64865

Hi dude <<If I had been a trader, I'd have sold all.. >> If I was a RATIONAL long term investor, and I held an investment that hit my ambitious 10 year target after only 3 years, I would harvest gains. I would take 60% and put it in a long bond maturing in 7 years (6% @ 7 years = 1.8 x 60% = 130% of expected return)... With the remaining 40% I would either (a) leave it to ride if I thought there was long term upside to the equity, or (b) take it to cash if I thought there wasn't. Seven years from now regardless of intermediate performance, I am guaranteed to exceed my original investment target by a factor of at least 30% and I can sleep at night even if the company craters and goes to $0. How did this apply to your specific SUNW situation? We can even forget the benefit of hindsight. Here you were looking at a price of $60 on a stock you bought at $6 three years ago. A high average return of 15% for 10 years would give you just under $25 in 2007. How do you get $25 in 2007 with a current price of $60? Well, just using law of averages (forget about FA on the company), there is a VERY HIGH probability that the stock craters to a third ($20) and then underperforms for the next 7 years. Or maybe craters to a sixth ($10) and then slightly overperforms ... or somewhere in between. Rigorous FA supported an overpriced situation. Hype, of course, was counterindicative. But most people are not RATIONAL investors. They are IRRATIONAL and, unfortunately, either "Savers" or "Speculators"... but not "Investors". So they listen to the soundbites and sell side hype and participate gladly in a very effective wealth transfer function. This is not just theory. It is a strategy some of us used last summer which saved our freakin' butts. John. P.S. If you bought at $6.00 three years ago, current price of $19 means you can still get a GUARANTEED effective 15% return over 10 years if you bail 85% to cash today and buy a 6% bond. Think like an investor...