To often beginning investors like to get involved with stocks that have been either focused on the news or provide a name which is recognizable in terms of products or services. While such assessment may be warranted in terms of steady growth and stability, such convictions are not always true and may provide discouragement more often than optimism. The company Nortel, a telecommunication corporation, seems to fit such a sentiment and provides no assurance for further capital gains. When looking at the aspects of technical analysis over the past five years, Nortel has engaged in some rapid fluctuations creating a vast collage of emotions for investors. After reaching a high near 8.50 during the winter of 2002, shares of Nortel, like most other technological stocks, fell in dramatic fashion to an all time low. Typically, while technological stocks fall during times of recession, a margin of nearly 85% was too high to go unheeded. Such a situation only presented itself as a foreboding venture to be part of. If you were lucky you would have bought the stock at such a low price and intelligently sell such shares when the stock reached yearly highs of 6.00-8.00 nearly one year later. If you were not so lucky and were succumbed to the forces of avarice, as an investor you were put into a world of hurt. I still remember the day exquisitely. It was near the end of April of 2004, and I turned on my computer to learn about the accounting problems facing the company which eventually transcended into a nightmare of restatements, delayed restatements, corporate official changes, and an ignorant attitude awaiting for the price to reach 8.50 again. However, up to this day such a price has not been reached, and I do not expect such a rise anytime soon. Sitting on its worst levels of 2.00, the lowest since October of 2002, you would expect such a branded company based in such a sector to be at a 52 week high by now. Nortel, which finished the accounting disarray months ago, acquired competent personal for its front office, expanded its resources and products into emerging nations, recently posted good earnings and revenue margins, provided guidance for increased profit potential, and came off high times of inflation when such a stock usually performs at its best is still at struggling at its 52 week low. With a recession becoming more inevitable everyday, I see no optimism for Nortel, especially because of the cautions institutional investors are placing on this stock. While I do not like telecommunication stocks during such a time period, if you have to pick some stocks of this kind, look a different way, because there is really no telling of the harms that Nortel can cause you. |
