Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: Iceberg who wrote (427)	2/19/1999 11:15:00 AM
From: Sun Tzu	Read Replies (1) \| Respond to of 10550

Let's say the fair value for the stock is 75 (based on myown evaluation of course). Then I will only buy it at most 60 if the technical picture is not negative. When dealing with volatile or cyclical stocks (take a look at charts of VECO and RMBS) then I expect even more. Under favorable conditions, the stock can become 30% overpriced before I get nervous about it. So this risk premium works almost both ways. Here is an example, a couple of weeks ago I bought TECD at 20 because based on my evaluation, the fair price is ~27. It quickly bounced to 25 and I sold it because (a) the technical picture was not positive and (b) I would not be a buyer at 25 as there was only 10% risk premium for something with the momentum against it. Besides, a 25% gain in a week is not bad. Regards, Sun Tzu