3SOF

It's funny how you guys always focus on the losers of the Stocks on Fire Portfolio. The portfolio is up 0.8% today, yet you're looking at the biggest loser. DIET is the stock thread with the most page views recently. Why? Because it is the worst performer of the Portfolio.

Of course I have no problem with that, just registering the fact.

I would never consider averaging down, because when I'm losing the message I get from the market is "perhaps you're wrong". If I start losing more than 20% the message is "you're probably wrong". At -30% the market is screaming: «you're wrong!». Remember that it doesn't matter how much a stock is down, it can always go down another 99% !

To add more shares I need to feel more confident, and the way to get more confident is for the market to start showing I'm right by putting the stock in the gainers column.

I like DIET, but if I were to buy just one stock of the Stocks on Fire Portfolio it would be SYX, because there the market is screaming out loud: "you're right David".

Good luck with your additions of DIET shares, I hope the stock founds a bottom and starts moving up soon, but this isn't a technical or fundamental play, it is an anticipation of good news, that may change the company's future in a substantial way (to the better, we hope).

Quote from: David Randolph on January 08, 2007, 02:38:59 PM
It's funny how you guys always focus on the losers of the Stocks on Fire Portfolio. The portfolio is up 0.8% today, yet you're looking at the biggest loser. DIET is the stock thread with the most page views recently. Why? Because it is the worst performer of the Portfolio.

Haha, you're right!  Maybe it's just the value investor in us that makes it happen.   I'm still trying to figure out why I tend to gravitate towards the "bargain" stocks but I think it has to do with the fact that I'm a bargain hunter in real life.  I don't like buying anything at full price, whether it's a car, computer equipment, clothes, whatever.  That has influenced my stock life and is something that I am working on changing although I may never be able to do it.  More and more I am trying to embrace that part of my personality and use it to my advantage.  In other words, be smarter about my bargain hunting.  It has produced mixed results but I feel that I am on the right track.  Now, I have to work on my real weakness - impatience.  One thing that I have discovered on this journey is that buying "bargain" stocks doesn't work unless you can be smart (buying the right bargain stock at the right time) and patient (holding it long enough to realize your foresight).  I'm working on it.

And it's not that I don't buy great stocks such as SYX or BRLC.  It's just that I don't hold onto them long enough to realize the potential that they have.  Again, I'm working on patience....

Quote from: David Randolph on January 08, 2007, 02:38:59 PM

I would never consider averaging down, because when I'm losing the message I get from the market is "perhaps you're wrong". If I start losing more than 20% the message is "you're probably wrong". At -30% the market is screaming: «you're wrong!». Remember that it doesn't matter how much a stock is down, it can always go down another 99% !

David is right.  Averaging down on a losing position is only a way to see your losses become compounded.  You want compounded earnings, not compouned losses.  Better to buy more stock as price goes up, not down.  I know, it's the bargain hunter or value investor in all of us but in my experience, it's the best way to watch more money bleed away.  Unless you can hold on until the trend reverses.

I have a friend that loves to average down and he is successful at it since he is willing to hold a stock for a couple of years if need be.  He bought Providian a few years ago when it was hovering around $2.00 and I don't think he has sold yet even though it was bought out and his shares converted to the new company.  Now he is in Doral and hurting although in a couple of years, that may turn around also.

As usual, everyone is right. This is a learning process for me and when the more experience educate the less experience, it is a valuable lesson. I need to take lessons in being patient as well and should know better that time does heal all wounds. I look forward to learning more in the coming months.

in many respects,averaging down probably is  the wrong thing to do. then again,there are stocks like chtr. when that slumped,i bought some more.things worked out. in that case though,the volume was always there,not like diet. may we all profit in the new year. soxguy

Thanks for the great posts basonista, lancefur and soxguy

Basonista, I understand your "bargaining instinct". But, a stock is a bargain or not given the comparison between the market's value and the perceived fundamental value. Let's not even talk about low priced and high priced stocks, because, as we know, the share price doesn't reflect the market's value, only the market cap does.

But, a stock with a low market cap can be expensive and a large cap can be cheap (a bargain).

Moreover, fundamentals change a lot. A stock can go down and get more and more expensive, because fundamentals are deteriorating faster than the market cap declines. And, as often happens (especially with Stocks on Fire Portfolio stocks ), a stock can go up and yet become cheaper and cheaper, because fundamentals are improving faster than the share price rises.

So, "bargain" or "expensive" is kind of a complex matter, you shouldn't base your bargaining instinct on share price only.

I share your "patience" concerns, the path to being more of a long term investor is perhaps harder than I thought at first. I have several years of day trading on my back to now change so dramatically. The financial services industry wants everybody to be short term oriented (the media, the brokers, the investment banks) but seriously, there's no economic base to support short term trading.

Patience is a key word. I guess to accomplish "patience" one needs long term motivations to buy/hold/sell stocks. One can't buy a stock just because it rose today and expect to own it for the long term, there's no base to it. Because, if one is rational, if he bought because it was up on one day, he must sell when there's a negative day, doesn't he? Of course, most people believe they can be irrationally and rationally right at all times But unfortunately soon they find out they can't.

Lancefur is taking the right perspective on the 3 Stocks Premium Service. He will learn from his and my mistakes and successes, and probably will become a better and better trader as time goes by.

Quote from: soxguy on January 08, 2007, 03:36:48 PM
in many respects,averaging down probably is  the wrong thing to do. then again,there are stocks like chtr. when that slumped,i bought some more.things worked out. in that case though,the volume was always there,not like diet. may we all profit in the new year. soxguy

Yes, in most times averaging down is a mistake (because a stock can always go down 99%, it doesn't matter how much it declined before. You can buy it down 99% from its highs and still lose 99%, always keep this in mind - many people think they can't lose since they're buying so much lower than others did. But if they think of the company, instead of the share price, its obvious a company can go from being great to being bankrupt).

Yes, CHTR was a great play and I should have held it longer. I need to work on that patience side.

Finally, for DIET, the same thing can be happening here. Just watch EGHT, I was bullish on that stock but sold for a 20% plus loss. Then it fell some more, but today it rocketed higher with very high volume. Was the market right when it made EGHT go down with low volume? I guess it wasn't.

So, perhaps the lack of information, the low volume and general disinterest is taking DIET down, but just that, nothing is changing or getting worse at the company. One day some good news will be released and DIET will recover all its losses, plus more.

I'm not just hopping for those news, I know the company is working on them. I just need to be patient and wait for those news to come out to the public.

For those who are candlestick fans the chart today shows a "sticky sandwich" which is a bullish reversal pattern.

I'll continue holding DIET.

I plan to buy some DIET tomorrow.  I had held back so far because I noticed that the traffic rank of their site on Alexa.com had gone down in the last 3 months.  I know this may not be a big deal in reality, but I have a web business myself so put more faith into Alexa than most might. 

However, I see a nice little traffic spike starting with the new year, which indicates to me that maybe the new years resolution effect is happening, which if nothing else should provide a good trade opportunity, that could also turn into a long term investment    The chart from last year seems to indicate a New Years effect

Secondly, I think the chart represents a decent risk to reward with $3.40 appearing to act as support as it should.  (Plus the tweezer bottom friday and the stick sandwitch patter David mentioned today are nice signs, too).

Thirdly, as I go to their website now, I see that they have Suzanne Sommers, so they are finally using a celebrity appeal to market.  I dont know if that was brought up in this thread already, but seems like a positive development to me (unless they had her or someone else before, I never saw it before).

i agree with you david that good news will come along eventually. maybe i'm naive, but the fact that suzanne summers is out there pursuading suburban american women to try the product is a great plus.if you wonder about the value of marketing,look no further than apple and their ipods.they made that a must have item for people who didn't know they needed one. anyway,i don't know what market forces have caused diet to sell off,but i believe they'll be back.on such a thinly traded stock,that could be anytime. soxguy

Let's ride DIET!!  Now looks like a great entry with minimal risk.   

Lol, the more I lose, the more you guys love DIET.

It's funny how the stock traded down to touch basonista's ascending trendline and then rebounded some, to close with a doji candlestick which can be a sign of at least a short term bottom.

There weren't any news or changes at www.ediets.com or www.nutrio.com. Someday those two websites will be merged into one and a big press release will hit the wires. But the big one I'm expecting is the new food delivery service.

I'll keep on holding DIET, good luck for you bottom fishers

Quote from: David Randolph on January 09, 2007, 04:59:19 PM

It's funny how the stock traded down to touch basonista's ascending trendline and then rebounded some, to close with a doji candlestick which can be a sign of at least a short term bottom.

Too bad my plan stopped me out below the horizontal support around 3.40.  Of course DIET came back to close at my original buy point.  Sometimes my trading plan takes me out of positions early, like DIET, and other times it protects me like in OMNI's 10% fall yesterday.

I understand the pitfalls of trying to define "bargain" when it comes to stock price.  I guess what I mean by a bargain is more in the line of a stock that has begun (or continuing) a bullish run and pulls back to some support line or area, hopefully before it continues it's run.  APPL and BRLC are two stocks that come to mind that I have been in lately.  The momo stocks do it also (GOAM did it a couple of days ago) but momo support levels aren't as evident to me as they are in the slower movers.  SOFO and TTWO are two stocks that came down to an easily definable support level that I will post on shortly.  I'm just more comfortable buying these stocks than trying to catch them on a move up not knowing when the pullback will occur - and it always does.  I find I incur greater losses trying to catch the "rising knife" than trying to catch a stock that is at a support level.  These support levels also allow me to define my risk/reward more easily although shakeouts like yesterday on DIET take me out of some of these positions too early.

Patience - maybe one of these small biotechs could discover this cure.  Either pill form or liquid would be nice.

we touched 3.27 again. double bottom? we shall see. soxguy

3.20. let's bounce! soxguy

I was jetlagged from 2 weeks of vacation in Asia so slept through market open yesterday and didnt wind up buying DIET. 

I was tempted again today but also slept through market open, and now the chart isnt showing me what I would like to see yet despite the arguments I made to myself in my last post.  Yesterday's candlestick should have been bullish, and the market was up today, so I am confused at the price action on DIET. 

So I am now on the fence about DIET, will see what David has to say.

i would understand if David sold based on the way diet is behaving. i'm trying to look at it long term. i do wish there was some volume. i'll wait for a catalyst to get this moving. i would think management is working on this.  soxguy

To be honest with you DIET chart is pretty ugly, price is under all the important moving averages daily & weekly chart.... 50sma in the weekly chart is also pointing downward looks like it's going under the 200ema & 200sma.

Goodluck though