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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Asterisk who wrote (13282)	8/4/1998 10:02:00 AM
From: Gregg Powers	Read Replies (3) \| Respond to of 152472

Michael: Hopefully this is a redundant debate, but I suspect that I would plug the darn thing (i.e. monitor) in myself if I allowed such a colossal screw-up :-). I disagree emphatically with your Las Vegas metaphor. Individual investors, particularly within their area of professional expertise, are probably every bit as capable as us "experts". While I am an EE, I have never worked in telecom...so I have had to invest loads of time to understand concepts that you probably learned in your second week on the job...so who has the advantage? What us "professionals" are supposed to have is perspective and judgment. When is a stock cheap? How does one evaluate asset value? How to you do a discretionary cash flow analysis of a growth company? How competent is management? Experience is our advantage. However, I really quarrel with your notion that "small guys" should view their money as risk capital. Capital is precious. A lottery mentality encourages speculation in the Yahoo's and Amazon's instead of sober investment in less sexy, but more fundamentally sound, vehicles. Within this context, market corrections and/or bear markets should create opportunity not dread. Let me use an automotive metaphor (acknowledging in advance that cars are a depreciating asset and that this is therefore an inherently flawed example). The Lexus LS400 is almost universally acclaimed to be one of the finest sedans in the world and MSRP is roughly $60,000. Now, imagine a scenario where everyone gets a big year end bonus, and simultaneously decides to splurge on the Lexus. With the car now in short-supply, dealers would start marketing them up, charging $5,000, $10,000 even $15,000 premiums. If car buyers behaved like most stock market investors, they would view this as POSITIVE..GEE, the price is moving up, I better pay up and buy my Lexus right now. So people would end up paying $75,000 for a $60,000 Lexus. They still bought a great car...but they paid too much and are fated to get "killed" financially at trade-in time. Now, let's envision a situation where car sales are terrible, and the dealers have lots of inventory but nobody is buying anything. My guess is that you could probably walk into the dealer and buy that $50,000 or even less. Under such circumstances, it might even be possible to drive the car for a year and sell it for what you paid. The former example was "momentum" investing and the latter was "value" investing. The former requires you to buy the Lexus for $75,000 and flip it to some greater fool for $75,500 before everybody figures out that you overpaid. The latter strategy allows you to buy and hold. Stocks are obviously much better than cars because businesses grow and expand in value over time rather than depreciating. But the analytical objective remains the same. Think in those terms..don't play Las Vegas with your precious capital. Best regards, Gregg