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Author: Padavona Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121363  
Subject: Re: C'mon Rat Date: 12/19/2000 8:16 PM
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Much thanks to all the great friends..and much extra thanks to all the great and greater friends that support rat and his site...we shall return!!!...MacArthurRat

And thank you Rat for providing us with a fantastic venue for learning, venting, and getting to know each other.

Though irreverant in your style, you bring a severe reality check to TMF boards. Particularly in stock board land, where the pumpers play, and every dip is a firesale opportunity. Where are all of your RFMD buddies these days? Well, all you can do is warn them.

I suppose when the mindset of "it's a buy at any price" overcomes logic, it takes a complete annihilation to slap people back to reality. Not that it does not sadden me to see people lose capital.

Hell, I screamed OVERVALUATION on more than a few boards this year, once I got a clue <ggg>. It didn't make me too many friends. Too bad I didn't take 100% of my advice and go to 100% cash. But I'll settle for 60% now, as I watch my limit orders get closer and closer.

Ah well, I wasn't here for the first 10000 posts. But I certainly enjoyed the last 10000. Allow me to give something back. I recommend all follow investing plans which meet their own risk-reward scenarios. Here is mine:


1. Preserve capital. There are too many opportunities to accept anything more than a 8-10% loss on any stock.
If it reaches that point, move on. As William O'Neil admits, you will be wrong in selling about half the time. But you sell for the same reason you purchase insurance...just incase.

2. Stick to the best of breed. Don't bottom fish. This applies to all sectors, not just technology. And there is plenty of aggressive growth opportunity outside of technology, so diversification does not necessarilly have to mean dilution of returns.

3. Ensure best of breed is fairly priced. Use Return on Invested Capital, Intrinsic Value models, and P/S and margin metrics to make this determination. Is it severely underpriced? If so, perhaps the market is telling you something? Is it severely overpriced? Move on.


For the TA folks out there, I offer these modest observations. There is a long term trendline, using log charts on the Naz, and the lows from 91 and 98, which suggests support @2000-2100. Secondly, calling up a 2 year chart clearly shows a bullish divergence taking place with RSI moving higher (almost exactly as it did between mid April and late May 2000 signalling a turnaround).

Thirdly, and most importantly I feel, the capitulation is finally beginning. I don't know what the newsletters say, but watching the price action between 2 pm and 4 pm this afternoon was strikingly bearish. We hit a point around 3 pm where suddenly no price was too low. The bottoms all fell out at once. That tells me investors are really starting to panic. We aren't there yet, but I feel we are on the way. Then again, maybe this is all bunk and I am reading tea leaves.

Time to get serious folks. The purchases we make over the next few months could be the staples of our portfolios for years to come.

Good luck as always
DP
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