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 (NYSE: VMW). Though the virtual computing sector is hot, you'll find that a few of the 1,917 Motley Fool CAPS members weighing in on the company offer reasons to be bearish.

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.

2. Competition
While VMware parent EMC (NYSE: EMC) has faced increasing competition from NetApp, competition from Microsoft (Nasdaq: MSFT) and Citrix (Nasdaq: CTXS) has been building in VMware's space as well. Both competitors recently launched a joint promotion targeting VMware users, and Citrix continues to build its Xen brand, recently releasing its Citrix XenClient for laptops that it developed with partners Intel (Nasdaq: INTC) and Dell (Nasdaq: DELL). Some CAPS members are concerned that VMware has had the market essentially to its own -- until now.  

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.

To see details of what CAPS members are saying now about VMware, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts in the comments box below.

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Fool contributor Dave Mock still doesn't understand why professional dodgeball hasn't come to prime time. He owns shares of Intel, which along with Microsoft is an Inside Value pick. VMware is a Rule Breakers selection. The Fool has created a covered strangle position on Intel. Motley Fool Options has recommended buying calls on Intel and a diagonal call position on Microsoft. The Fool owns shares of Oracle. The Fool's disclosure policyis a virtual policy, but also comes in paper form.