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

To: Richard Tsang who wrote (44752)	5/26/1998 12:46:00 AM
From: F The	Read Replies (1) \| Respond to of 176387

Check this article. The Fabulous Market Babe Stock of the Day 5/20/98 Dell Computer/DELL Just in case you are wondering, I try to be timely, not totally obvious. Let me ask just one question. When a stock is up over 120% year to date and it report earnings that slightly exceed expectations, what do you think the stock will do? Exactly what DELL is doing today. Make no mistake about it - DELL is a stellar company, if not just in terms of execution, certainly in terms of stock performance. After all, stocks being up 2000 whatever percent in a few years are very hard to come by. Those of you that actually made money the difficult way in 1992 -1994 (i.e. without a booming market) know exactly what I am talking about. Believe it or not it was not always this way. I can still remember, back in the early 90's, early one morning my top ranked hardware analyst coming over the system, his voice shaking, telling us that DELL would announce that morning it was missing the quarter due to FOREX losses. The timing was certainly imperfect, as my firm was involved in DELL's secondary offering at the time. The stock, subsequently, got severely whacked. As we all know, things are a little different now. DELL subsequently executed perfectly, never looking back. Which leads me to where we are currently. As stated in my Market Mood 4/28/98 column, I really doubted if we would see the liftoff in the stock that we saw after last quarter. All that is well and good of course, but totally historical. The most important question is where does the stock go from here? First of all, we should be aware that DELL's business is not going in the toilet by any means. They are and continue to be the undisputed leader in the hardware business. However, the company and the stock for that matter suffer from the "overinflated" disease. What is "overinflated" disease? Funny you should ask. "Overinflated" disease occurs in the following situation: what do you do when you have a lot of excess cash and you really don't know what to do with it (this describes a majority of portfolio managers in case you were wondering). You put it in stocks that "work". And DELL certainly has worked. The problem is, you as a manager, are not the only one doing this. All of your competitors are as well. This is all well and good until this "trend" reverses itself. Not a very pretty picture. Just imagine all of your fat smelly competitors fighting over each other to get through a door first. Anyway, back to what the stock is going to do. My best guess is that we will see a quick 10% correction. Not necessarily today, mind you, but within the next week. Given that we will probably continue to have a "nervous" market for a while, the stock will probably correct a further 10-15%. After that, like everything else it, becomes a "buying opportunity". After all we are in a bull market.