Remember QCOM's 1-4 split around the new millennium? That kind of gold rush time is coming again. Take JCOM as an example! The best time to load JCOM should be before its split date August 21 2003 and to unload is after that date.

Somebody may argue with me by saying: "why don't you look at the sucker EBAY?" It was a split-would-be candidate! NasdaqChina, seemingly a MM, pumped it many times. Its performance still frustrated many investors.

Why is there such a big difference? TA and FA matter. I can come up with a few rules that worked for me during the 1999-2000 tech boom.

a.It must be a growth company, especially fast growing.
b.It must be in a hot sector.
c.It must be a small or mid-cap company. As a dominant power on line, EBAY's market cap is too big. We can magine how much more $ is needed to push EBAY' s price higher as to that of JCOM.
d. No analysts bug it. Upgrades are preferred, but definitely downgrades are not a good thing.
e. The market cooperates. In other words, the market must be bullish around the split.
f. It must have a sound technical chart. Slowly moving up before split is the best. In others, price appreciation with low volume in an uptrend is the best.
g. It is better if the target stock has tradable options.
h. WHEN TO SELL? SELL ON THE FIRST DAY WHEN SPLIT IS EFFECTIVE.

BTW, if you dare to take more risk, you can buy long-term calls instead of stocks. In the winter 2004 some club members along with me successfully invested SYMC calls. It's a classical example. No pain, no gain. I wish you good luck.

¶ 11:42 PM

Post a Comment