Post of the Day
September 21, 1999
America Online Folder
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JDCRex in post #21359.....
No, I don't necessarily need the money right now, and no I don't think AOL will vanish, but there just seems so many negatives (real or perceived) hanging over the head of this stock that I am starting to get really worried about the coming earnings numbers. If they are not stellar, and I mean REALLY stellar, if they are just great, then I can only see more sliding, yes, possibly all the way down to the Barron's short's 50 mark. Hell, it's been under a month from the last price peak, and it is already almost halfway there. And that is basically on negative sentiment rather than any tangible solid news. If anything actually noteworthy in a negative way comes out, woe begod this stock. Again, I am tired and a bit emotional as I speak, so I hope I am just ranting.
Sorry to hear you are having second thoughts! :) Of course no one should tell you what to do. Each of us has has a different goal, different entry point, different tolerance for gutting it out. If I may offer some suggestions of what helps me (I've stood in your shoes way too many times!)
First, AOL is a quality stock currently being punished by the market. True, there are some barbarians at the gate but there always have been and alway will be. So, knowing I've a quality stock I'd quit looking at it on an hourly basis. Or even a daily basis. If I'm not on margin - or my margin is below 20%, I'd find something to occupy my time and just look at the stock once a week for the next month or three. AOL can be volatile (try CMGI for volatile!) but I believe we are at or near the bottom on this cycle. Just my opinion and no more. By the way, I'd never believe anything Barron's said - especially about AOL. Barron's for whatever reason, has an antipathy towards AOL!
I know this is a volatile stock, but lately it has been volatile in one direction only (which I suppose isn't really volatile). Unlike the Fools I don't have a cost basis under a $1, and I am feeling like a genuine fool (small f) for buying in once more. I have no one to blame but myself (and I did allocate too much of my capital to one stock).
Faint heart never won fair lady! Or, those that fear risking big never achieve big either. That doesn't mean one sacrifices one's common sense but if investing were 'easy' everyone would be a winner. I'd offer a great suggestion - look up and read every BruceBrown post you can lay your hands on. And learn from someone who has it right. Not that he hasn't made a few mistakes but I'd sure trade my mistakes for his! :)
There are two secrets to winning in the market. (IMHO) The first is to select great companies [in AOL you've done that!] The second is the hardest - and here most fail. Patience! One little old word. But its so easy that it isn't. Kinda like DELL's direct marketing. Hell, anyone can sell direct, right? Wrong! :) So, you're half way to glory - now its gut check time. But, again, take a crash course on BruceBrown - you'll be glad you did.
I just can't see what could move this thing up in a significant way, other than a winning solution to the "broadband question" (something I feel has been completely overblown anyhow, but perception is reality). And yes, short term price fluctuations should be ignored, but sometimes you have to wonder if this is the turning point. I doubt that AOL is going to vanish. Hell, even if it's valuation was quartered, it would still be a massive behemoth of a company. And I suppose that is what scares me.
There are any number of events that can start AOL rolling like crazy. An announcement that they've reached another 1 million subscribers will set this thing off quick. With all the doom and gloom about free ISPs (Yipee!) and MSN competing (Whoopie!) and no broadband strategy (Arghhhhhhh!) whatever is poor little ole AOL gonna do? Well, free ISP's have been around for awhile and haven't slowed the train yet. MSFT tried (and failed Masterfully) to make inroads into AOL's domain. As for broadband ALL broadband subscribers today total barely 1 million for ALL cable companies combined. AOL and CompuServe total over 18 million and now have several broadband strategies working including ADSL deals with BA, SB and Ameritech. They have contributed $1.6 billion to Hughes Electronics to develop satellite broadband and they continue to negotiate for cable access with the several cable companies. Beyond that, they are expanding markets in Asia, South and Central America and Europe. AOL is offering features that make their sites 'sticky' such as ICQ and AIM and proprietary content. The list goes on and on and on. This is an incredible company!
Anyhow, tell me I'm an idiot or that you don't need the bearishness added to. I am trying not to sell as I have an uncanny knack of picking bottoms to sell at when I *do* panic sell, but whenever I look up I just see more bleeding.
If you are a long term investor (I gathered you were!) this is just "noise" as you weren't going to be selling today anyway. But if your personality or traits are such that this really bothers you perhaps the stock market isn't for you. Hopefully this is just a momentary downer for you and you'll hang tough but its always your call!
Hopefully I'll look back on this post in 6mos-1yrs time and think "what an idiot".
I do recommend you save your post and review it, from time to time like you mention. Remember, investing is a long term commitment which means there will be periods that any stock is down. Just ride through those times - add if possible - and smile. In the end you will be the winner and all those traders of others that panicked and sold will wish they had the backbone to hang tough. Just MHO, of course! And worth every penny, doncha think? Cheers to the AOL faithful and GO AOL! :)))