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.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • The Kelly Letter
    A Complete Investment Management System
    The Kelly Letter  every Sunday morning by email.
    Like no other. Many subscribers say this is the best read of their week, astonishing in its ability to distill seven days of noise into one succinct overview of the very few items that might matter. Start your Sundays right!
    A one-page Quick Start Guide
    with page number references to full information in The 3% Signal. You'll receive access to this right away so you can begin transforming your portfolio into a performance machine immediately.
    The 3Sig Calculator.
    A thing of beauty! You'll use it to generate your own personal signals every quarter including exact share amounts to buy and sell based on your account balances. It emails you the results to make later quarters easy by keeping last quarter's numbers at your fingertips. Some subscribers say this tool alone justifies their subscription price.
    The subscriber-only section of this website
    where likeminded investors are commenting on notes and discussing in forums. Jason joins these interactions every day. They're a treasure trove of investing tips and wisdom.
    The archive of Kelly Letter notes.
    It’s a research center, searchable and smartly tagged to make gathering time-stamped material on covered subjects easy.
    The subscriber podcast.
    Jason reads every letter word-for-word. This feature was requested by subscribers who prefer audio learning. They listen on their Monday morning commute, during a workout, or while reading along at their computer.

    Save 17%

    Pay as you go
    Or sign up to receive free email and learn more about the system.
Bestselling Financial Author