StockPickReport: 'The $10,000 Question!'


SHREVEPORT, La., Oct. 1, 2004 (PRIMEZONE) -- StockPickReport, the web's only non-mainstream stock rating service, rates Sun Microsystems, Conexant Systems Inc., PMC-Sierra Inc. and National Semiconductor Corp.


 STOCKPICKREPORT RATINGS:

 Sun Microsystems (Nasdaq:SUNW) -- SELL
 http://www.stockpickreport.com/rating.php?sym=SUNW

 Conexant Systems Inc (Nasdaq:CNXT) -- STRONG SELL
 http://www.stockpickreport.com/rating.php?sym=CNXT

 PMC-Sierra Inc (Nasdaq:PMCS) -- SELL
 http://www.stockpickreport.com/rating.php?sym=PMCS

 National Semiconductor Corp (NYSE:NSM) -- SELL
 http://www.stockpickreport.com/rating.php?sym=NSM

STOCK COMMENTARY:

Friday, October 1, 2004 StockPickReport Commentary

"What to Do With MRK -- The $10,000 Question"

Merck (NYSE:MRK) was hit hard today. News that Vioxx will be pulled from shelves around the world sent MRK straight down Thursday. This move down is unprecedented for MRK. We could not find such a move over the last five years. Investors who own MRK were clearly sideswiped with this "shocking development".

What is most alarming about the MRK move today is that a stop/loss would not have helped anyone who owned MRK. For example, we can see a clear support level around $43.50 -- $44 that extends back to December of 2003. Yet, investors this morning who thought they were in a "safe" stock were hammered into the realization that NO stock is safe. MRK opened $33.40 Thursday -- $11 below Wednesday's close.

We thought it would be appropriate to discuss what an investor should do if a stock they own breaks a stop/loss unexpectedly and forcefully.

First, understand that there really is no "right" answer. When a stock is "taken apart" like MRK, it's often hard to figure out what the truth is. News reports come in "fast and furious". Message boards become active with rumors, innuendo and talk of lawsuits. It seems as if everyone has an opinion.

But which opinion is right?

Some folks say, "Hold on a few days, the stock will bounce back. They always do." Other observers' say, "Sell now, this is just the beginning. Wait till you see what happens when the lawsuits begin." Finally, others say, "This is a great time to pick up more shares. You're in it for the long-term, right? Average down, walk away, and check back in a year."

Historically, all of these positions have some form of validity. Yes, sometimes stocks "come back", but on the other hand, sometimes companies literally "go out of business", too.

A couple years ago, we wrote an essay called, "The $10,000 Question". Since there are so many divergent ways to look at a situation like MRK's freefall, we think investors need one "overriding" philosophy to weed out the subjective, emotional, possible reactions.

With that in mind, here is our original essay, "The $10,000 Question":

Traders sometimes find themselves with a stock that continues to drop. Nevermind the fact that they didn't employ a stop/loss. They held on while the stock dropped. And dropped. And dropped.

Each morning they turn on the financial channels and grimace as "futures look down today". Each tick up in the losing position brings a surge of immediate joy -- only to be followed with a sick feeling as the stock closes down for the day -- again.

Each day, these traders try to find ways to justify "holding" this stock as it drops. They self-talk themselves with comments like, "This has got to come back; look at all the institutions that own it!" And, each day, sadly, they hang on while their stock drops and drops and drops...

If you try to tell them to sell, they say, "I can't take a loss", or "If I sell now, I'll miss the move back up." It's sad, really.

What we suggest is that any trader ask themselves this question, "If I had an extra $10,000 laying around, would I buy MORE of this stock at these prices?"

The answer to that question should be enough to help the trader decide what to do. The ONLY reason to own a stock is to MAKE MONEY. If you can't justify a current position with the $10,000 question, maybe it's time to admit the trade went the way you did not expect -- maybe you should close your position and find a better place for your money.

For More Commentary Go Here: http://www.stock-letter-daily.com/index.htm

WHAT THESE RATINGS MEAN:

StockPickReport.Com ranks stocks with technical analysis. These ratings do not indicate a "long term" view. These ratings reflect an opinion for the short term. These ratings may change based on market conditions.

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 Sun Microsystems (Nasdaq:SUNW) -- SELL
 http://www.stockpickreport.com/rating.php?sym=SUNW

 Conexant Systems Inc. (Nasdaq:CNXT) -- STRONG SELL
 http://www.stockpickreport.com/rating.php?sym=CNXT

 PMC-Sierra Inc. (Nasdaq:PMCS) -- SELL
 http://www.stockpickreport.com/rating.php?sym=PMCS

 National Semiconductor Corp. (NYSE:NSM) -- SELL
 http://www.stockpickreport.com/rating.php?sym=NSM


            

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