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Technology Stocks : Spectrum Signal Processing (SSPI) -- Ignore unavailable to you. Want to Upgrade?

To: Galirayo who wrote (449)	1/5/1998 12:55:00 AM
From: pat mudge	Read Replies (1) \| Respond to of 4400

[Off topic: TA/FA] <<>> Ray -- Experience is a fantastic teacher, isn't it. Perhaps the only teacher. Several factors I consider that probably can't be scanned: management and strength of sector. If someone recommends a stock because their cousin or uncle or brother-in-law owns it, avoid it like the plague. Their judgement will be impaired because they're too close. If, however, the owner/manager in question has a track record, that's different. A friend of mine co-founded Price Club and later became chairman of CPU. Because I knew what he'd done at the former, I trusted what he'd do at the latter --- and he did. I've bought ANIC partly b/c the Anixter family has a long and successful track record in the business. And CKEYF has Terence Matthews as chairman and his success with NN is near legendary. Spectrum's CEO comes very highly recommended (I've talked to 5 people who either know or work for him) and I like his style of not hyping his company. Study their press releases and I don't think you'll find fluff anywhere. It's hard to analyze management, but if you're long-term, find a way. Timing your entry into a given sector isn't as easy as it appears. You want to find those that have been hit, but only temporarily. Semiconductor and networking are two that come to mind right now. If there's TA for sectors, then I'd use it. Last spring I re-entered the networkers too early. Big ouch! I suspect we all believe telecommunications will be one of the biggest growth areas in the next few years, so if you can find companies that have been hit by the Asian crisis that don't really have a huge exposure to that region, they're probably worth looking at. (I'm going to revisit FEIC --- semiconductor equipment mfgr., 5 years 33% CAGR, focused electron-ion beam, sub-micron leaders, excellent management. . .) I noticed you mentioned book value. How do you determine the book value of companies whose prime worth is intellectual property? Look at AOL and nearly any software or Internet-related company you know. The same with biotechs. I'm a novice, so if you have some wisdom in this regard, I'm willing to learn. The same with earnings. Few would invest in biotechs or technology start-ups if earnings were a prime factor. Now, having said this, I find it far more comforting to invest in companies in the black than that other color. But, again, if this is a prime consideration you'll have to eliminate a lot of companies: AOL, Netscape, Yahoo, and so on. You certainly won't be among the first in an Iomega or CheckFree. Another factor I consider that's probably not even a fundamental, and that's understanding. By that I mean I avoid companies I can't understand. For example, I seldom invest in software companies primarily because I can't differentiate among them. I'm not good at biotechs, either. After all the is said and done, I like to be challenged. I want to be excited about the companies I choose. That's why I'm in telecommunications and not waste management or health care. Okay, I could go on and on, but I'd get into theories of investing that have nothing to do with fundamentals. In summary, pick good management in leading companies in growing sectors. I would imagine many of the fundamentals will be supported, even though they weren't the primary criteria that led you to discover them at the outset. And don't let anyone tell you when to buy. Only you can decide that. "When there's blood in the street. . ." is not a bad adage. And not for the faint of heart. Oh, one other piece of advice: be patient. Some of my biggest mistakes have been in bailing too early. (And some have been in holding too long. :)) Cheers! Pat