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November 30, 2004

Investment Philosophy

As I watch Intel (INTC) decline, I am reminded of the many perspectives on how to think about investing.  As readers of this site know, I was enthusiastically hoping for a repeat of Intel's bang up performance in the December 2001 and 2003 time frame... and hoping we wouldn't see a sell of as we did in December 2002.  So now that we have had an end of November dip... whats the right investor approach?  Fold and take a small win off of the table?  Or hold, hoping for a longer term gain?

For me, it really depends upon the fundamentals, although I have also learned not to "fight the tape."  If the market wants to be irrational in the short term, it will and there is nothing to do about it.  So I typically find some stop-loss point to jump out, expecting to get back into good stocks at some lower plateau.

But if that broad based market sell of doesn't come and we just see stock poke around, I will hold quality like INTC for the long run.  Even if it doesn't go up in the near term (between now and the New Year), I expect that it will go up over the next 12 months.  And given the benefits of long term capital gains tax relief, holding for that minimum period can mean a significant increase in retained earnings...

So fundamentals are going to keep me in this Intel position, despite the tape currently going against my earlier bullish hopes.

November 30, 2004 in Philosophy | Permalink

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