To: Abe the babe who wrote (2208 ) 1/31/1999 10:39:00 AM From: michael r potter Read Replies (1) | Respond to
Since SFE peaked in mid '96, around $46, it has been in a 3 1/2 year trading range of $17 to $46. In retrospect, it obviously would have been good to get out around the highs, and waited until it was around the lows to enter. In an effort to see if there were any guidelines one could have used to make those decisions in real time, I checked on some fundamental and technical factors. The conclusions: Fundamentals were of little help, especially using NAV--no consistency of high/low premium at tops and bottoms. [In fact, it was misleading at this bottom as the premium was high, influencing some to bail out]. Since PE ratio is pretty meaningless with SFE it was/is of little help. Maybe one could have used some kind of average PE of the NAV companies, at tops and bottoms, but that is a bit tricky. Technical analysis fared not much better. Stochastics would have gotten one out at the top and in close to the bottom, but a religious adherence to them would have one re-entering too soon after the top and exiting too soon off the bottom of the major move and getting a bit whipsawed in between. One indicator called MACD is slower moving and worked fairly well. One would have been mostly in and out when appropriate with some whipsaw. Sentiment was of some help. In looking back at opinions on SI around the top, the feeling was fairly upbeat with some consensus that SFE was a good buy if it dipped into the upper and mid thirties. Almost no one [including this writer] said they were out and would stay out as the danger was great. Conversely, when languishing close to the lows, the opinion was one of much greater caution with less ownership by contributors. From a contrarian standpoint, it appears that fading the consensus was appropriate. Where do things stand now. In a word, mixed. Tehnical: MACD is solidly bullish and stochastic overbought [profit taking?]. Fundamentals: Most stocks that comprise NAV are in uptrends, with PE ratios that are neither cheap or expensive compared to their growth rates. Premium to NAV appears excessive, but since the market is a discounting mechanism, only time will tell whether this huge premium to NAV is also indicating an extreme in SFEs price. Sentiment: Both bulls and bears are represented on this thread currently, but Yahoo SFE is decidedly-bullish [a contrary indicator].
