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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (38317)	4/19/1998 1:05:00 PM
From: Ally	Read Replies (1) \| Respond to of 176387

>>But.... look at the highest three year return for mid caps. Iomega!!!!! over 3000 %. Yet now that company, and the stock, is a beaten dog. Some Japanese company reportedly has a new product that will pretty much kill Iomega, plus the Disc drive industry is in bad straights. You can see where I am going with this, being, on the one hand a wild singing cheery optimist and on the other a worrier. How does an investor know-what are the signs- that a wonderful performer is about to become a non performer.<< I think no one knows for sure when a hi-performer tech stock turns down.... not even professional analysts paid by brokerage firms to monitor the stock. What could be useful is to observe tech-stocks (in the sector) behaviour of the recent past. Frequently, the first sign of a downturn comes in the form of a warning from the company. A warning usually comes out after the market closes, and the stock tends to slump in the after hours trading. Next morning, any downgrades announced by analysts and further news are broadcasted on CNBC. Then, in the process and days following, the stock price tends to fall further. Observations: ...WDC fell from $50 to $38 on the first news release from the company of pricing pressures in Fall/97, drifted down to a low of $15, and has since recovered to $18. ...$CPQ went down from $36 to $23 the days following the warning and has since recovered to $26. ... IOM went into a freefall overnight from $13 to $9, recovered to $10, and has since tanked to $7. Earnings reversal in tech stocks can also be very abrupt: ...WDC's earnings fell to 3 cents/shr in the 2nd quarter ending Dec/97 from 67 cents/shr in the first quarter Sep/97 and 67 cents for the quarter previous year. ... Compaq's forecasted $500 million earnings for the quarter ending Mar/98 disappeared overnight after a warnings release, and the earnings came in at a penny/shr compared to 41 cents for the quarter Dec/97 and 27 cents for the quarter previous year. ... IOM's loss for the 1st quarter Mar/98 came in at 7 cents/shr, compared to profit of 13 cents per share the prior quarter, and 9 cents per share the quarter previous year. A good defence for tech stock investors is perhaps to be constantly aware of possible sudden reversals of fortune, and to always guard against complacency. There is no universal answer whether to buy/hold/ or sell since each investor's situation is different... risk tolerance level, asset allocation to the particular stock, skills, experience, investment time horizon, and luck. To safeguard against complacency, try and do a risk/reward measurement based on one's personal investing profile whenever a stock appears to be at a cross-road. One should look forward and not back when taking this measurement. Asks questions such as: -Has the macro environment change for the company (pricing pressures, competition, slow-down in industry). If so, how will it affect the stock ? -What does it take for the stock to continue its strong upwards momentum? Will meeting consensus be sufficient? How high do I think the stock will go further? - Is the stock fully valued/under valued at this price? - Am I prepare to withstand any substantial stock price correction? - Do I have a long term investment hold objective on this stock? - If I do take profit, do I know of an alternative investment as good as this one? etc. etc. Hope this helps.