Acting on panic never helps investors, but it's still a good idea to question why you're really buying individual investments.
Consider virtualization leader VMware
Here at The Motley Fool, we like to consider both the good and the bad sides of an investment, so in this article, I'm highlighting three of the main bearish arguments on VMware today. Be sure to read the bullish side as well, and then weigh in with your own comments below or rate VMware in CAPS.
1. Expensive shares
Warren Buffett advocates buying strong businesses that are leaders in their industries, but most likely wouldn't go near the high price that VMware's shares are selling for today. With the company beating the S&P 500 by more than 120 points over the past year and sitting at a triple-digit earnings multiple, some CAPS members are making a bearish call strictly based on VMware's lofty valuation.
While VMware parent EMC
3. Rising-dollar effects
Europe's financial troubles have added strength to the U.S. dollar. VMware, like Oracle, is among many strong companies in the tech sector that could experience a significant revenue impact from the rising dollar, according to a Citigroup analyst. With VMware generating about half of its revenue internationally, the effect could weigh on VMware's already high share price.