I wrote on January 8th about Seagate Technologies. The closing price the previous trading day, Jan 6th, was $21.39. Today the stock opened at $25.00, a 17% increase in a period slightly longer than two weeks. During this time, an earnings announcement doubled its profits and gave it enough momentum to survive the sharp declines of Friday January 20th, and started a flurry of press coverage declaring that “Hard Drives aren’t dead yet.”

Unless you’re making a portable gadget, or something that will be the centerpiece of an office or living room, it doesn’t matter how appealing the technology behind the product is. “Sexy” hard-drives were the unreasonable expectation of the stock market for Seagate, and when everything else added up, the company (and also any company in the hard-drive industry) was a bargain. When bargains show up, consolidations follow, pricing power increases, and profits increase.
Should the 2% across the board decline of Friday continue, there will be plenty of bargains to buy if you don’t panic. Be both patient and reasonable with your expectations, and time will beat the market.

This entry was posted on Monday, January 23rd, 2006 at 10:14 am and is filed under finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.