Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 50% Gains Investing -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (45258)	3/22/2006 5:46:25 PM
From: Carl Worth	Read Replies (1) \| Respond to of 118717

i think the main difference is that the tech backlog in 2000 was based on the demand that was created during the Y2K buildup, and the idiotic notion that such demand would continue, whereas in fact the demand dropped by 50 to 75% in many cases, and by 100% in terms of the fiber optic buildout, as those systems were overbuilt...the sector-wide crash was exacerbated by all of the excessive hiring done by those tech companies, to meet the phantom demand it's true that removing the speculators from the RE market will reduce demand, but it isn't going to drop by 50%...i wouldn't be surprised to see some pain in the condo market, but the housing market can afford a prolonged period of price stagnation or even short term small drops (such as occurred in las vegas in late 2004 with no lasting effect), without any kind of upheaval...the strongest areas in terms of housing price increases have/had that strength due to the fact that people keep moving there, so the demand isn't going to just fall of a cliff like it did for tech products after Y2K was done housing companies don't have a problem with overhiring, because almost all of their work is done by contractors one thing to note further is that in 2000, stocks like CSCO were trading at 200 times earnings, and many tech stocks didn't even have earnings compare this to KBH or other builders which are highly profitable, have substantial real assets in terms of land and housing inventory, and are trading at P/E's of 5 to 8 finally, note that i am not wildly bullish on the housing stocks, i just don't think the housing market or the housing stocks are headed for an implosion, especially as long as the economy and job market are strong my only positions in the sector are some short TOL 20 puts for jan of 2007 (if someone wants to sell me TOL shares at 20 bucks i will gladly take them), and a long position in NEW

To: Dale Baker who wrote (45258)	3/23/2006 2:23:05 AM
From: Dale Baker	Respond to of 118717

Don't Outsmart Yourself By Jim Gillies "When should I sell?" is one of the most popular investing questions. It's a lot harder to answer than "When should I buy?" We worry we'll sell too soon, leaving potential profits on the table. We worry we'll sell too late, perhaps after a 20% pullback from an all-time high. We make decisions based on emotion -- for example, selling in a fit following a bad earnings report. I'm as guilty as the next guy of making selling mistakes. But I'm learning not to outsmart myself. I'm going to let you in on my never-before-revealed 2006 New Year's resolution: I will not sell a share of stock this year (and perhaps beyond). Why on earth would I do such a thing, you ask, and wouldn't it have been easier just to lose 10 pounds? My tales of woe I made my resolution because my selling decisions have cost me a lot of money. Here are three examples: I used to own funeral-home operator Alderwoods Group (Nasdaq: AWGI). In its 2004 10-K, the company got a less-than-clean auditor's opinion, which is one of my immediate red flags. After a few days, it became apparent that the problem was related to new legislation (Sarbanes-Oxley) and not a big deal. But I'd already sold at $12 after buying seven months earlier for $9. A nice capital gain, and the tax man was happy to take a good chunk of my money. Today, the stock sits at $17. Ouch. I had not one, but two chances to hold UnitedHealth Group (NYSE: UNH). I'd owned two smaller regional HMOs -- Oxford Health Plans and Mid Atlantic Medical Services -- that were acquired by UnitedHealth. I made 43% on my Mid Atlantic sale and 14% on my Oxford sale. Wonderful, right? Not so much. If I hadn't sold the UnitedHealth shares issued to me, I'd be sitting on near doubles since the acquisitions. No commissions paid. No smiling tax man. One more. Electronic medical record systems provider Quality Systems (Nasdaq: QSII) made me four-bagger happy over the two-plus years I owned it. The company's rise combined strong execution and growth with the market's willingness to pay a higher premium for that strength. Midway through 2005, I became concerned with the company's valuation. I sold call options on the stock, trading the future upside of the stock price for some up-front cash. The risk was that the stock would continue to run, and I'd lose my shares for far less than the market price. Guess what happened? Even though Quality Systems is 27% off its high, it's still 22% higher than when I was forced to sell. Sell now! You own shares in a nice little business. You've got a nice gain. You're hearing "Don't be greedy! Don't you know pigs get slaughtered?" Someone close to me was gifted Starbucks (Nasdaq: SBUX) shares in mid-1998. Less than a year later, she sold for a nice gain in the 30% range. Excellent! But the stock has been a four-bagger from her sale price. For those of you counting at home, that's a foregone 21% annual return -- and no taxes paid. The Foolish bottom line To be sure, there are often good reasons to sell: A loss of faith in management or a valuation that goes completely bonkers, to name two. On the valuation front, think Cisco Systems (Nasdaq: CSCO) in mid-2000, trading for 150 times free cash flow. A fundamental business change would be another reason to sell. Imagine what an age-reversing pill would do to Alderwoods. But ideally, we should see that coming long in advance. This all leads me back to my resolution. I add new money every month to my portfolio, and now I'm going to make sure I hold my buys for a good long time. After all, I won't buy a stock unless I'm very sure of its long-term prospects. There's no reason I shouldn't benefit from all those years for which I take the time to project the company's cash flows.