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Thursday, April 17, 2008

IBM -- we'll be back.

Let me just be clear. I still like this stock. I will probably tell you to buy it again lower. I'm not encumbered by a lot of approval departments and such so I can flip around on stocks quickly. A sell side analyst would probably tell you to buy it on weakness. I would do that too if I were a sell side analyst, but I'm not.

The near-term momentum in the stock is likely to flag following the run-up from the $100 area to $124. It's also likely that managers will continue to build positions in IBM on weakness -- its a defensive name, its trading at 14* earnings and typically it peaks out closer to 20* earnings in the depths of recession. Earnings are rising right now so near-term you can have some faith in the E not dropping out of your P/E. I think you'll get a chance to buy it lower again.

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