Oracle has long-term upside potential but is currently fairly priced; recovery may take two to three years.

Last November, I bought 500 shares of Oracle stock at an average price of $311. That was a $155,000 investment. I bought them because I expected Oracle to benefit from the AI boom given its involvement in data centers and TikTok.

Currently, the stock has dropped to around $138 per share, which means I'm facing a loss of $80,000. My hope is that the stock can recover. I think many price targets place it in the mid-$200s , which could reduce my loss by about $50,000.

But my fear is that a recovery is n't guaranteed.

looking back, the company's financials look strong, and there wasn't any bad news at the time, so I can't pinpoint why Oracle hasn't ridden this AI wave like the other tech giants.

Should I wait for a recovery, cut my losses, or do something else? I'm really not sure. It could be Apple, Nvidia, or Oracle; the name doesn't matter . I would never advise anyone to invest a large portion of their net worth in one stock.

I can't understand why Oracle isn't riding this AI wave like the other tech giants." Others.

But in this case, for Oracle, and I've opened it here on my screen in FastGraphs, let's look at the price-to-earnings ratio. As See here, this black line is the stock price, right ?

And the blue line is their earnings. So, you can see that Oracle's earnings over the last 10 or 12 years have been trending upwards to the right.

Looking ahead, Wall Street thinks earnings are going to skyrocket. But Oracle's stock hit $300, like I said, $311. You might have literally bought in at the top.

But what I want to point out here is that the price-to-earnings ratio was at 47. So, what does that mean? It means the price-to-earnings ratio is 47 times the earnings per share .

So, in short, you're paying a lot of money for a small share of this company, right ?

Now , the price-to-earnings ratio has dropped back down to 18. You can see that the average historical price-to-earnings ratio is around 18.5 here. So, technically speaking, Oracle Now, at what price?

$142 per share is a historically fair valuation .

I think the most important point here is that you bought Oracle when it was overvalued. And now, unfortunately, stock market investors are saying, "Hey, we were a little too optimistic."

"The stock has never traded at 45 times price-to-earnings. Let's bring it back down to 18 times, which is the historical average for this company, and then the stock will start to rise as the earnings rise too.

I'm assuming someone told you that Oracle was going to be a huge success." Oh my God, you need to get involved in Oracle investment. "I got carried away . I fell into the trap of letting emotion dictate my investing.

In my opinion, Oracle probably has good upside potential in the long run , but it's fairly priced right now . They've spent a lot of money on capital expenditures. But they simply haven't made the returns they were expecting.

There are some short-term issues, but in the long run, I see that you could recover a good position in Oracle, but that could take two or three years.

Go back and look at Wall Street's expectations for Oracle. For example, I recently built up an investment position in Oracle. It's not worth $150,000. I'm going to pull it out now.

It's much less than that, but my average cost is $122 per share.

We talked, you know, again about Oracle being undervalued in the Wealthy Habits Network a few weeks or months ago, whatever the time, and we started buying it. But that was After that massive correction, right?

So, you can use Oracle as an example, and you can use silver recently in January as an example. You can use lots of different examples of this. If it goes straight up, it doesn't usually last.

So, if you just look at Oracle's price here, it went straight up in a short period of time.

The second piece of advice I want to give you is that you have 500 shares of Oracle. There's a possibility here that if you want to hold that position, you could generate a decent income from it using covered calls.

So, I've just done the math here for you. I think that with an expiration date of December 18th and a strike price of $175, you could generate That's about $2,700 in premium over that roughly two-month period.

Now, that's nowhere near anything—I mean, it's 1.5%, not even 2%, right?—on your $155,000 investment. But, if you're truly convinced about Oracle and you like the stock and want to hold it for the next three or four years, as you mentioned before, then you know, you might see some movement.