by Rocco Pendola
It's easy to get attached to a stock.
Like anything else, get attached to the right one and it's all good. Shack up with the wrong one and it turns into a nightmare of varying duration.
I read a ton of sell this or that stock or dead money articles every day. Ninety-five percent of them stink.
First, they speak in absolutes. Stock. Dead. Sell it. End of story. When I refer to a stock as "dead money," I'm not writing it off for eternity. I'm simply saying put it on the shelf for a while because the climate - be it macro or micro - just doesn't bode well for the particular name.
It's a bit like Ross and Rachel from Friends. We were on a break! Sometimes you need time away from a stock. You can fool around with others and, at some point down the road, when the thought crosses your mind, meet for coffee and see if it's time to get back together.
Second, the authors of dead money, sell now articles often feel the need to completely hate the stocks they write off. You can break up, but still be friends. In fact, with some of the stocks I mention in this article, you might even want to maintain a sort of "friends with benefits (FWB)" relationship, if the dividend looks worthy and stable.
Intel (INTC). Intel could definitely be an FWB. It yields almost 4%, the dividend should continue to grow and, no matter how bad things get, there's got to be a floor on this thing. I would suspect (and hope) the market will not treat Intel like Research in Motion (RIMM) or Radio Shack (RSH). It doesn't deserve that.
That said, as much as I want to like Intel, I am glad I sold the stock. I got out before the 12% plunge we have seen over the last month.
Why is this happening?
It has to do with more than lowered expectations. And this is key when you get into a sell now, dead money frame of mind.
Consider the bigger picture a company such as Intel must deal with.
I suspect it's not retail driving this downward trend. Funds have to be shedding some shares. Both hedge funds and mutual funds. We'll find out shortly after the current quarter ends.
Why would the ones with a long-term mindset get out if Intel is not dead money?
It could be because so much of Intel's future relies on the success of the dying PC market. Given the quality and rising sales of Apple's (AAPL) Macbook (and don't be shocked if Tim Cook presents even more affordable options), I'm not sure that's where I would want to be.
Add Intel's late entry into the mobile market to the hurt. Names such as Qualcomm (QCOM) beat Intel to the punch. Just because Intel says we have this or that great chip "coming" doesn't guarantee success.
Unless you have the time and don't mind collecting the dividend on what could be a stagnant stock, better options probably exist; QCOM is one of them.
Get ready for sub-$10 territory and a low-single digit P/E ratio at Dell. Hewlett-Packard likely does not suffer the same fate because investors will give the company more time because it shook things up and hired Meg Whitman as CEO. While I'm not impressed with Whitman, somebody somewhere is. A few somebodies.
Whitman can keep herself as part of the conversation. When I watch Michael Dell speak - most recently with Maria Bartiromo on CNBC - I feel like I am looking at a statue. And, when the words come out, unfortunately my opinion doesn't change.
Dell gives an annoying elevator talk each time he (doesn't) answer a question. He makes it sound like he can't talk for competitive reasons. I venture he can't talk because he has nothing to say. Like the former (and current) CEOs at RIM, Dell lost the handle on its business long ago. Now, it attempts to enter areas that others dominate.
There will be other hardware makers to buy behind Apple and pseudo-hardware makers like Amazon.com (AMZN) and Google (GOOG). I'm just not sure who they are at this point. Microsoft (MSFT) could salvage things and make Windows 8 a player, however, something tells me there's a tech incubator percolating somewhere in Silicon Valley, waiting to spit out a formidable startup from out of nowhere.
That's where the innovation happens. In the Valley. That's why Intel, over the long run should be fine. That's why Whitman is able to keep HP's toe in the water. Dell is no longer even part of that scene. I'm not sure, even in its heyday, if it ever was.