To: George Gotch who wrote (30356 ) 5/19/1999 5:57:00 PM From: Art Bechhoefer Read Replies (4) | Respond to
George, it's not that simple. A 30 percent pullback says that there is a fundamental change in future prospects for the company, or that virtually the entire market is undergoing a correction. Predicting a pullback of that magnitude is not easy and filled with uncertainty. What is more likely is a smaller pullback of, say 10 percent. The problem of a pullback of that magnitude is in determining when the pullback begins and when it ends. Most people can't do that very well, and I include here even the best technical analysts. Because of the difficulty in pinpointing a pullback, the transaction costs, and the capital gain taxes (which might be less if the shares were held sufficiently long), the average investor will not gain appreciably trying to hit these momentary peaks and valleys. Instead, the average investor will do much better sticking with a good, well managed company with good long term prospects UNTIL there is a fundamental change in management quality or long term prospects.
