Waiting For Even Cheaper Prices

I need to take a break from the heated Bush v. Kerry discussion to talk about money.

Longtime readers are aware that I sold my primary stock position, Sun Microsystems, back in February. I said at that time that I expected to buy back in at cheaper prices over the summer. We’re a little past summer’s halfway mark, and the cheaper prices are upon us. Sun closed Friday at $3.69, down some 35% from my recommended sell prices between $5.50 and $5.85. In later articles, I suggested that the new buy trigger for Sun is $3.75. We’re below that, so buying now would be wise in my view.

Having said that, I must go a step further and point out that I have not personally bought again yet. Why? Because I feel that this leg down has further to go. The elections have introduced a higher level of uncertainty into the markets. The possibility of a terrorist attack intended to disrupt the elections has made investors even more nervous. Those nail-biting emotions combined with a fairly dismal earnings season underway — particularly in the area of technology — have rained on the spring bull parade.

This was all expected to pass if you believe what I write in this space. No surprises here, except that low prices have come a bit earlier than I thought they would. Therefore, I think a buy price at or below $3.50 will be available. I’m holding out for that, myself. However, I think buying anytime now will prove profitable in the near future.

That’s the word on Sun.

In my May 15th article New Year Pickings, I told you about two January investment ideas from the supposed pros. Kevin Landis proposed buying UT Starcom at a price of $37 and SmartMoney magazine suggested buying Maxtor at a price of $11. On May 15th, the two were down a respective 27% and 38%. I said that I hadn’t bought yet because I don’t buy cheap, I buy very cheap.

While I’m not yet sure that we’ve reached very cheap, I am sure that we’re a lot closer. Since my May 15th article, the stocks have dropped further. UT Starcom closed Friday at $24.87, down 33% so far this year, while Maxtor closed at $4.84, down 56%.

You could do much stupider things in life than to buy any of these three stocks at these levels. You may want to keep a close eye on them in case the sale gets even deeper. That’s what I’m doing. Here’s a convenient link to all three current quotes.

I’ll be sure to let you know if and when I buy, as always.

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