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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (43174)	2/3/2009 10:13:10 PM
From: Pam	3 Recommendations Read Replies (1) \| Respond to of 95561

"Buy on the first sign of a loss and sell whenever they become profitable! Of course, there are many that never recover to the price you paid and keep generating losses!" Do you have a favorite formula with proven success? No, I don't. Good research and timing are important, yet one can make mistakes. Buying a company like LRCX at first sign of a loss, might result in a purchase earlier than necessary. Inefficient use of capital. Invest in a company like MU and you will never recover your principal! My method of averaging in as companies on my list fall below prices I think are good value works over the long term, but I am damned tired of the portfolio volatility. I'd live to find a better method... but this seems to be how Buffett does it too. Dollar cost averaging, in general, is a good strategy as long as you invest in right companies. Judgement and timing are equally important. Again, you could have averaged MU over the last 10 years and you would still be losing money! The stock has consistently traded below BV, a metric which a lot of people here seem to like it. Yesterday, SNDK announced their earnings and they had a huge write-off of Goodwill and other intangibles and BV was suddenly cut by a significant amount (35-40%)! I am not sure if Buffett is well known for averaging. Buffett used to buy stocks trading below liquidation value based on principles taught by Benjamin Graham. Then he met Charlie Munger who taught him that sometimes you have to pay a premium for quality companies and he started buying companies with a wide moat around them, even though he had to pay a premium over liquidation values. The key advantage that Buffett has is that he has cash coming in regularly (premiums collected) from insurance business. He is an excellent stock picker with a good understanding of value, tremendous amount of patience and he waits for the right opportunity to put his money to work! Good judgement and timing are important parts of his decision making too. But since his investment horizon is extremely long, he could be off in timing and yet he will come out ahead as long he hasn't made a judgement error!