| Using similar reasoning, I bought in at $32 last spring, thinking that
was the bottom. I got out last month, real close to $32, thanks to
a sudden and unjustified runup (Barron's called it a short squeeze).
If you knew the price had bottomed, and you thought the long-term
prospects were good, perhaps you should buy in. Neither is true.
For a stock price to bottom, the company needs some prospect of
returning to profitability. The company grew by being first in
a new niche, but they're no longer first, and it's not clear that
they've found any other niches. So, I think they're just as likely
to drop to zero as they are to rebound.
If you are looking for a company whose stock price graph looks like
DEC's, but which might have bottomed, look at Cray Research.
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I concur with .1, though I never bought the stock I've kept an
eye on it. From what I understand, some of their products aren't
patentable and they are in fierce competition with Ethicon (subsidiary
of J&J). They are having a cash flow problem which means they'll
be going to the bank (or equivalent) for money.
This stock is even riskier than DEC.
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| Thank you all for your replies. I have decided that this stock MIGHT
be a good buy when it reaches 25-30. Afterall, a stock which once
traded as high as 120 not too long ago would be still a good buy at say
$30. So, for now I am staying away and watch it on the side...
The advise I have received on these situations is that you should wait
until they rebound (if they ever will!!) and go from there. This way
you might not catch them at the absolute bottom, but then you wont;
loose all your investment either. Was it will Rogers' who said
"I am not worried about the return on my investment but return OF my
investment".
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