New Year Pickings

At the beginning of every year, financial magazines and newspapers roll out their picks for the upcoming year. These range from suggestions from the magazine’s own editors to suggestions from so-called experts. I generally spend ten or twenty minutes at an airport newsstand each year with a pen and paper to write down the most interesting ones to me — and then watch during the year for a time to buy cheaper.

We’re getting some pretty cheap prices right now, which has triggered my attention but not my investment yet. I don’t buy cheap. I buy VERY cheap.

Someone you can always count on to point you to overpriced stocks heading for cheaper prices is Kevin Landis, the manager of Firsthand Tech Value. Unfortunately, he doesn’t point out such stocks as short candidates, he suggests buying them. I first assailed Mr. Landis in this article written in October 2002 when his fund was down 68% so far that year. So far this year it’s down 13% and his big new year’s pick, UTStarcom, is down 27%. Check out the chart line from the beginning of the year to now. That’s quite a discount and might just entice you to buy, but of course the strongest buy signal would be news that Mr. Landis is selling.

SmartMoney suggested buying Maxtor, the hard drive company, at a price of $11. It closed this week at $6.78. That’s a drop of 38%. It’s easy to see why the magazine was excited about the chart. On May 20th last year, the stock hit $6.07 then rose to a high of $15.38 on October 17th. Settling back to $11 from there seemed like a good buying opportunity as the economy was supposedly kicking back into high gear. Plus there was all that cheer about tech spending picking up and, lick your lips, hard drives are going to be used in much more than just computers — they’ll be used in home game centers, personal video recorders like TiVo, car dashboards, and so on. You can read SmartMoney’s report here. Now that the stock is almost back to where it was a year ago, few people are interested. The industry is too competitive, margins are too thin, it’s a commodity product, and so on. Worth a look, I’d say.

There are others on my list, but those two are the biggest droppers so far. I haven’t bought either. I’ll be sure to mention if and when I do.

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