To: David O'Berry who wrote (7947 ) 2/16/1998 10:08:00 PM From: Marathon Read Replies (1) | Respond to
You must distinguish the character of AOL service from the character of AOL as an equity. I have tried AOL's service and it totally sucked. I do not believe any serious user of the net uses their service for long. However, I do believe that the first forays onto the net of many new users begin at AOL.COM. Short term that is great. Long term that is fatal. In the short term AOL has some very bullish characteristics. (Internet use as a whole, e-commerce, stock split, perception as leader, etc.) I do not invest in a company because I love their products. I invest because I believe they will make me $$$$. The investment world is littered with defunct or nearly defunct companies that made great products but lost out to a competitor who for whatever reason was perceived as the leader (i.e. Novell, WordPerfect, Apple, Netscape vs. Microsoft). Invest in a stock because you believe it will make you $$$. Or on the contrary don't short a stock just because you hate their product, president, or service. In the long run weakness in those areas may indeed tank the stock. But in an emerging market (internet) perception rules and substance and reality are often ignored. I do not have faith in AOL's long term prospects. However, the short term trend is definitely up. Thus month to month I have bought slightly in the money calls and have 3x my $$$ in that time. To fight a clear trend in a stock hoping to time its eventual downturn is attempted market timing folly. Momentum investing on the other hand is a tried and proven strategy. Each months call position has on average more than doubled and never expired (or was exercised prior to) for less than what I bought in. No doubt if I continue this strategy forever, and for now I will, AOL is going to tank and one month's worth of position will probably expire worthless. I consistenty invest the same reasonable proportion. When AOL does turn the small amount I will lose will pale in comparison to the pile made will the momentum lasted. Then it may indeed be time to start buying puts. I have lurked on SI for more than a year and on this thread for more than 6 months.
