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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: JeffT who wrote (57971)	2/25/2002 4:26:46 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77400

Hi Jeff, good questions. The reason is that I am looking for a short term trading opportunity. If I was truly going to hold long term, then I wouldn't mind buying at right around now. The truth is that $13 represents my ideal price to buy at, where as $15 is my indifference point, or was before I heard about the executive shenanigans with Sequoia Capital. The other point you made was that I should wait to buy below $13, since my DCF analysis says that $13 is Cisco intrinsic value. That's not exactly right. Since I used a discount rate of 10%, at $13 I will make an approximate 10% return on my invested money over the long term before inflation and taxes. You can think of 10% being my hurdle rate. If instead I wanted my hurdle rate to be 20%, then the price I'd be willing to buy at would drop substantially. But right now, I am not looking to go long any individual stock. I'm looking to trade a little and then a bit at a time unload all my individual stock holdings. For instance, after 9/11, I bought in at around $12 and sold at $19.96, for a tidy profit. This time around, I'd like to buy in below $15, preferably $13 (which represents the lowest I think Cisco could go), and then sell at above $20 within 3-4 months. That's just my plan, but it may never come to pass and I'd be happy with that too. As to why I don't feel comfortable going long, it's not because I am leery of Cisco, it's that I have become increasingly leery of individual stocks in general and large cap stocks in particular. However, remember that I am already long some Cisco shares from way back when, which I will unload in due time (sometime next year).