SI
SI
discoversearch

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.
Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?


To: Stonehenge who wrote (15879)2/1/1998 12:08:00 PM
From: Loki  Read Replies (1) | Respond to of 97611
 
Buying stock on margin in this environment...

Buying on margin usually carries an annual interest expense between
7.5% - 9.0%, depending on your portfollio size and broker.
(My guess is 8.5%-8.75% for you)

A (secure) fed/state tax-free bond can yield the equivalent of 8%-9%
pre-tax. (Very conservative opposite view point for comparison)

This means stocks on margin should return above 16.5% annually.
Considering the points below this sounds like a very aggressive
investment strategy.

- Historically P/E multiples have run ahead of earnings
We might see a market correction or sideways movement while
earnings catch up.

- Analysts do not predict the type of increase in stocks that
a margin strategy dictates

- Asia will have continued affects on earnings later in 1998

- Europe could be affected by Asia 4Q and there exists a potential
this could negatively influence US companies early 1999.

- White House scandals creates insecurity with investors

- Iraq?

Considering your tolerance to risk is extremely important.
Look at your asset allocation? Are you trying to peserve or create
wealth? What is your time frame?

Personally, I don't sleep well, at present, when I have 100K on margin.

Be careful and good-luck.

(Just my opinion)
Loki



To: Stonehenge who wrote (15879)2/2/1998 12:12:00 AM
From: Dr. David Gleitman  Respond to of 97611
 
It's good to see that I'm not alone. Over the years, I have used computers in my practice going as far back as 1983(approximate year) where I employed the use of an Atari 800 (?) computer with 88 K drives . The base model was 8 K of RAM which I maxed up to a full 64 K using large RAM modules. I later upgraded to a Kaypro computer, then Kaypro 10 (with a 10 meg drive, which I thought, at that time, would hold an infinite amount of information where I would never require any additional memory. I then went and upgraded to the first "transportable (read- transluggable portable computer at 27 lbs) computer, the Eagle. BTW, there was another company that was also producing a translugable portable by the name of "Compaq" (but who ever heard of a company that ended with a "q". I then went through further upgrades to an IBM XT, then AT, then a 386, Dell Pentium and Micron Notebook. At this time I have found that I am maxing out the use of my 133 notebook with 48 meg ram and 3.5 gig drives. The point to all this is that software demands are increasing at what appears to be an exponential rate. It appears that compaq is making the right moves by diversifying their product and service lines. Competition demands that we all upgrade our hardware to the times or perish in the process (darwinism). Even those asian companies under the financial cloud will require upgrades in order to compete.

The bottom line, is that compaq with it's diverse line of products and services (including DEC) will excell in capturing a greater market share both foreign and domestic. It is the promise of increased productivity that will keep the tech sector alive and well, despite these occassional "hiccups". I have learned to distrust those prophets of doom beacuse many of them are noting more then myopic monday morning quarterbacks.

That's just MHO.

Best of luck to all.

David