Dario,
PCP and MTW are the two of those that I trust the least. I’m waiting on earnings on MTW, but PCP is pretty much hoping that the Boeing strike will end soon. I’ve got a pretty long time horizon and history is telling me to be optimistic. When the market bottoms (if it hasn’t already) it could either surge up, or just meander around and not go anywhere. There’s a lot of fear in the market, more than most market commentators “have ever seen.” According to Ben Graham, the market price of a stock can be broken down into three factors:
1. Intrinsic value (fundamentals on balance sheet)
2. Future growth expectations (income statement projections)
3. Market factors (fear, technical analysis, etc) — Hugely over weighted in times of widespread panic and fear — like now.
I try to find companies that have very strong 1 and 2’s and very negative 3’s. I figure companies that make a lot of money and should only be helped by the changing socioeconomic tides should eventually reflect that in their share price; but I don’t expect them to reflect this in their price very soon. Am I selling? No; but it may appear so. I’m assuming that the fear will have dissipated 1 year from now. I’m slowly leveraging my portfolio for a bull run by slowly shifting from stock to long calls (January 2010) on a select few companies in my portfolio.
There’s still a lot of overpriced companies out there; just try not to own any of those.
CEDC should be worth $175, but I’d consider selling at $75
AOB should be worth $20, but the asian stocks are all tracking around ¼ of the value of the rest of the stocks (why, I don’t know, so I’m overweighted now in asian stocks)
For the rest, a good rule of thumb is when the annual growth rate (5 year projected) gets close to the PE ratio OR PEG ratio > 1, sell. But make sure to watch the financial statements for signs of weakness.
Hope this helps?
Glen
From: Dario Visnjic
Sent: Friday, October 24, 2008 6:15 PM
To: gbradfo
Subject: Stocks
Hey Glen
Just read all your article on your website and Stockpickr. Thanks for all the recommendations. I read about the Buy Google and Apple and you said sell Google at $500 and Apple at $160, if am not mistaking. I own some stock that you had in your articles and when do you recommend that I sell AOB, VDSI, PCP, KCI, MTW, and CEDC. I got those from your articles. Also I own JPM, JpMorgan & Chase. When od you think I should let it go.
If you coudl please write back and let me know what you think.
Thanks
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