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

To: Stitch who wrote (319)	12/6/1998 2:53:00 AM
From: Carl R.	Respond to of 1989

I'd have to agree. I'd love to take long term positions, and I do have a few. But in tech stocks I think that short term is still the present, given my belief that we will have strong tech performance for about 6 months due to Y2K, followed by a reversal due to the fact that Y2K will accelerate purchases, not generate new ones. Thus we binge now, and have the hangover the following year. Carl

To: Stitch who wrote (319)	12/7/1998 11:16:00 AM
From: Robert Douglas	Read Replies (3) \| Respond to of 1989

Stitch, For what it's worth let me throw in a few thoughts on short selling. I've done some of it over the years and had my share of frustrations, but also managed to make some money at it. My experience has taught me that short selling should be done very cautiously because the risk/reward ratio is upside down. You rarely want to get into a position where your losses are unlimited and your potential gain is limited. Since we all are prone to mistakes, we don't want a small mistake to be amplified into a large loss. Having said this, why do I bother with it? Because sometimes the market excesses seem more obvious on the upside than they do on the downside. It also is a good disciplining tool to go open-minded into an analysis not knowing whether you should go long or short. A number of years ago I had a conversation with one of the best investors that I have ever met personally. He told me that he had seen a list in Barrons of the biggest losers over a given period. Out of the list of 10 stocks he told me that he at one time or another had been short something like 6 of them and had covered 4 of them at losses! These were stocks that were down 80% or more and he had lost money shorting them! The lesson is so clear that you can be right on the fundamentals, but get killed on the timing. This is the peril of shorting because it is imperative that you cut losses lest you end up short a Dell or a Amazon and get wiped out. Like I said earlier, caution and small positions are a must when shorting. A few years ago I shorted a market darling, Micron Technology. They were making unbelievable profit margins and the earnings projections were extraordinary. I shorted some in the $70s and even near the highs in the low $90s. It was on a tear and Soundview Financial was calling for a $150 stock. Merrill Lynch's analyst, Tom Kurlac, (who is presently bearish on Intel, comfort for all my fellow Intel longs) raised his rating on the stock just about at the top. I was mighty nervous, but held on since my positions were small enough that even a rise to $150 would not kill me. You all know the rest of the story, DRAM prices dropped like a rock and MU saw the teens. I covered around $30. Was this foolish? Probably. Was it luck? Possibly. But my analysis was sound and my strategy was proper. You have to have both to come out on top of the short game. -Robert