Wolfson - Super Growth for 2005......

I have been told on many occasions that share prices reflect what the market expects to happen a year or more hence. In the case of WLF in October 2004, it totally failed to grasp the temporary nature of the sales shortfall (they only rose 50% instead of the 100% expected or something like that!). Even extrapolating that trend would have indicated a sensible price around the 200p mark imho. At the crazy 100p of the day it was a no-brainer so I heavily averaged down and continued to add through the recovery to 150p.
What lesson do I draw?
Markets are not rational. The present price is well justified and may continue to be so - but it is equally likely that irrational exuberance will take hold to the point of assuming an unbroken expansion of sales and profits leading to exponential growth that will continue indefinitely. It won't - particularly in the notoriously cyclical and now fashion-led chip market.
The time to sell - not yet - will be when EVERYONE agrees that the sp can only advance further. At this point there are no more converts to be made and the peak has been reached. Then, one slight wobble and the price will overreact downwards again.

At this stage, no-one can guess when this might be. However, it will be wise to lock in profits in due course without waiting to make the last penny.
However, for the moment, enjoy the ride and dyor.