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I second that. Studies by fund managers have shown that whenever a largely held
stock has a string of good earnings reports and all of a sudden has an unexpected
disappointing earnings report due to business pbs, that stock then goes on to
largely underperform its benchmark for a longer time, hence doesn't warrant holding
it as aggressively as before. Sole exception I know to that rule is ALCATEL in
France last year (chips and mobile phones, one of the most widely held French
stocks), which opened 40% down but recouped all of that and more since.
Obviously, in a vastly expanding broadband market, LU has trouble keeping up, a bit
like AMD against INTEL initially. My view is that one earns more betting on the
leader, than on the would bes. LU appears to be more and more a would be, while
NORTEL; JDS and others are still in the leading pack.
FWIW
Gwenn
Martin Coffey wrote:
> Wong,
> While LU may be a great company, I have observed over the years, that large cap
> widely held issues are prone to very severe corrections, which often last a
> VERY long time. Examples that spring to mind are, MU in 1995, CS in 1996, and
> DIS in 1998. In this regard, the daddy of them all was IBM, which took 6 years
> from the top in 1987, to lose 75% of it's value.
> LU is currently THE most widely held issue in this country.
>
> Just another opinion.
> Martin.
>
> wong wrote:
>
> > Hi All:
> >
> > Here's a great tech stock - LU (Lucent). Recently, negative news sent the
> > stock price plunging downwards.
> >
> > Please refer to the attached weekly chart of LU.
> >
> > I would like to go long on LU or its Jan2002 leaps (more venturesome ones
> > may want to buy the Jan2001 leaps instead).
> >
> > I would base (very loosely) my decision on confirmation of any 2 indicators
> > - as usual, in oversold areas and just reverse direction to the upside etc
> > etc. (For refinement, one might want to look at the daily chart with
> > indicators as well.)
> >
> > Note that because of the infrequent sharp drop, for the wb_dema indicator,
> > I might view the upward reversal NOT at zero line, but the yellow line I've
> > inserted. This concept of NOT using the zero line is very loosely based on
> > Appel and Hitschler's "Stock Market Trading Systems" (198) - drastic
> > oversold conditions which rarely occur but relatively safe to enter long.
> >
> > Of course there's no guarantee after one goes long, LU will not continue
> > its downward movement again. In such case, I would not mind averaging
> > down. (That's why I prefer the Jan2002 series.)
> >
> > Things are relative. Buying stocks and calls in a BULL market is great
> > fun. But when the bull is finished and when BEAR reigns, the above won't
> > work any more. So before one buys LU and/or LU leaps, one has to decide
> > whether the present bull market will still continue to exist in the future,
> > and of course one can never be sure if the bear market has begun until
> > afterwards - hindsight !! ...
> >
> > When I talk about averaging down, I usually bring up Lichello's "How to
> > Make $1,000,000 in the Stock Market Automatically!" - the AIM system.
> >
> > Just an off-topic observation, here's Lichello applying the AIM principle
> > on ordinary daily life matters (cf Signet paperback 3rd revised edition Jul
> > 1992 - page 209):
> >
> > He said:
> >
> > "... Well, I bought a jar of instant coffee at a supermarket recently for
> > $4.95, and then, at a second supermarket, saw the same item on sale for
> > $3.49. So I used the AIM principle and bought two jars at that price.
> > Result: I'd bought three jars for $3.85 each! Not a bad price at all..."
> >
> > I used to kick myself when I bought something at regular price and then 15
> > minutes later I saw the same product selling for maybe 50% less. Now I
> > will buy more of the same product at the discount price, provided, of
> > course, it's in good condition...
> >
> > Regards,
> >
> > Wong
> >
> > Regards,
> >
> > Wong
> > =========================================
> > Previously I wrote:
> > >A better way to enter long may be to wait for at least 2 indicators to
> > confirm buying.
> >
> > >I would rather risk missing going long than entering too soon.
> >
> > Attachment Converted: "c:\eudora\attach\orcl-back in 1998.gif"
> >
> > ------------------------------------------------------------------------
> > Name: LU-weekly.gif
> > LU-weekly.gif Type: GIF Image (image/gif)
> > Encoding: base64
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