DIET

[tokyopua]

Anyone receive the daily update this morning?

I didnt get one yet, and havent seen any updates from David so I assume he is still sick, hope he gets better soon!

[snowcat]

If you want to see how vague responses from management impact a stock and show what is really going on, check out the BRVO thread.

I am just saying that there are better, more predictable stocks out there to invest in.

This is a gamble.

Snowcat Out!  Let me go haunt another thread.

Maybe if I got my daily newsletter, this would not have happened.

[Loffigus]

I think that this could come down to around $4.50 to touch the long-term ascending trendline.
If it breaks that support line, then it's going to be in trouble all the way down to $3
I think that if it does rebound from that support line, I would definately start a position.

FYI: I Do not own shares of Diet.

[Gu$tavo]

Excuse me,,  I INSIST with my yesterday post (at least after I read the letter I made up my mind and sell) as I don't see any strategic here..

*-*-*-*-*-*-*-*-*-*-**-*-*
This is an old news but after yesterday & today  reactions, it makes a lot of sense..

Odyssey Value Advisors LLC Suggests eDiets Board Engage Banker to Sell Company
MONDAY, NOVEMBER 14, 2005 8:01 AM

http://bigcharts.marketwatch.com/news/articles.asp?guid={AC801780-C4B0-4920-92B2-D3690B58089F}&newsid=850400466&orig=&time=&symb=DIET&sid=178505&source=htx\http2_mw

Dear eDiets Board of Directors:

Odyssey Value Advisors, LLC owns 330,000 shares of common stock or 1.5 % of eDiets (DIET) . We would welcome and encourage you to hire a nationally recognized investment bank to immediately explore the sale of the company and to maximize shareholder value. While we realize that decisions of this magnitude are made at the board level, we would encourage this action now. In our opinion, a sale should be considered now because management has had difficulty communicating its value creation strategy to the market. As a result, the market has not been able to reward the stock with the appropriate multiple. Most importantly, there are strategic buyers eager to acquire comparable companies and they are paying multiples substantially higher than e-Diets current equity valuation.
etc etc etc the letter continue

[Lucas Scott]

I've added to my position a few times and my breakeven price is now $6.17. I'm not stressed about it. DIET has the numbers behind it to support a solid rebound from this level. Under $5 now, WTF? It will just require some patience. I think it will see $8 again in one year's time.

Revenue
2002 $29.6M
2003 $38.3M
2004 $45.4M
2005 $53.7M

Revenue growth, profit growth, cash flow positive, 13M share float, forward PE of 18. Fundamentally it has what it takes to let me sleep soundly at night. If DIET had numbers (or lack of numbers) like an SVA, INSM, CPST, ALTI, BCON, I would be worried because those stocks ultimately have nothing besides hype and momentum to back them up.  

I could blame it all on David Randolph, after all, his instructions were to hold this turd.
But I take full responsibility myself. No matter what David may or may not reccomend, it is MY decision what to do with my positions.

That first sentence cracked me up. Thanks Cal for the chuckle. David is the shepherd and we are his sheeple. I would like to see David double down on his position. He loved the stock at $8 and it is trading at a steep discount now. If a stock is truly worthy of being considered long-term, the common practice is to add aggressively when you get discounts like this.  

[1reilly]

Lucas Scott
Good comments. Clear, supported and a plan. Had someone posted just the opposite opinion I would support them also.
I've just received an e-mail as I am sure the rest of you have. I'll be very interested in the future of this site.

[Melf Elf]

I sympathize with all of you who are long.  This is a lousy position to be in, and I know that it hurts.

Those of you who were following the HGSI thread last autumn will remember that one-day whacking of about 25% I took when the stock gapped down on me.  My choice, which I posted before the open, was to sell at the market at the open, no questions asked.  That will always be my personal choice.  I want OUT in that situation, and I want to move on and use the money to produce gains on other trades.

Since it's too late for that if you're still long, I like what shawfund suggested yesterday with his charts, and mike )1really) is suggesting here today (applauded).

Neither of us knows if we will add to this position but I can tell you that if I do I will treat this stock as though I've never heard of it.

I like that, Mike.  "Don't get married to a stock."  At this point, you're trying to manage the position in a buisness-like manner, and its best to put the emotions aside.

I'm going to look to see if I can make a technical case and a fundamental case at these new price levels. If I can't I won't add

I like that very much.  You're not getting married to the stock, and "throwing good money after bad."

In the examples of charts that shawfund put up yesterday, they all bottomed, and it all "worked out" fine.  That also was the case with HGSI, but I had sold.

Looking at the HGSI chart below, it's easy with the benefit of hindsight to conclude, "Gee, if I had just held on, the stock bottomed only six days after I sold it!"  True, but we're looking at only one stock.  I can show you many, many charts were the stock gapped down, and years later, still hasn't recovered..

Think about this: If you "double down" every time you take a hit in a stock, sometimes it will work out, sometimes it won't.  During the years ahead, you're going to face this situation again, when a stock you own is down 10%...15%...20%...25%...30%...

Let's say that you "double down"  in those situations, and it works out 75% of the time (I'm being generous).  25% of the time, it doesn't.  

After awhile, you're holding all of the 25% of the stocks that didn't work out, and you're handcuffed.  All of your portfolio eventually will become losers over time, if you employ that strategy on a regular basis, and if you keep adding money...same thing will happen "over time."

If you're going to double down this soon after yesterday's gap down (and I strongly urge you not to do it as a strategy on any stock), at least try to do it at what "should be" support, like a 200DMA...or a 50% or 618% retracement...or some trendline, etc.  Something that is "logical," where you have a reasonable expection that the market is going to respond there, and take the stock higher.  

But, gosh, if you do that, I would advise putting a low-risk stop under your second entry so that you don't let the trade turn into a disaster.

I applauded Oliver (laonda) for getting out of his "double down," and I'm going to applaud him again for posting it publicly.  It's hard to admit our mistakes to ourselves, let alone in public, but doing it really helps the rest of us to be honest with ourselves and with each other.

A number of you already have posted that you already have doubled down, and I want to be very clear that I never would criticize any of you for doing it, and I sincerely hope that it works on DIET.  I also understand why you did it, but please consider my comments about employing "doubling down" as a regular strategy in your trading.  

I think that most experienced traders would tell you that if doubling down on losing trades isn't the "#1 Sure Way To The Poorhouse," it has to comes close.  The stock already is in trouble, or you wouldn't be doubling down, and "troubled stocks" aren't the kind that we want to be playing.

Also, keep in mind that if you're  new to the market since October, 2002 and have had some success with doubling down, you've also been in a bull market.  Wait until we move into a bear market, and we will, at some point.  The stocks that get hit the hardest in a bear market aren't the strong stocks; it's the ones that already are weak.  

"Cheap stocks get a lot cheaper."

If you've decided to hold, I think it's wise to wait for a pattern to emerge, as others here have suggested.  In HGSI, there were three great opportunies to get long again, but it took a quarter, just as Mike is suggesting:

1. The Symmetrical Triangle breakout in early January.

2. The Ascending Triangle breakout in mid-January.

3. The pullback to the Ascending Triangle in -mid February

All of them produced gains of better than 25%.

Good luck with DIET, everybody.  I know it's tough to take a hit like this.  I've been there.

[netfishmademerich]

I've just received an e-mail as I am sure the rest of you have. I'll be very interested in the future of this site.

I'll take a guess that the longer-term portfolio will be liquidated and pennies will be back in the SOF portfolio.

[Melf Elf]

I've added to my position a few times and my breakeven price is now $6.17.

Luke,

Geez, I didn't read that before I posted, and I apologize if it looked like I was "taking a shot" at you.  I wouldn't do that, and besides, I'm hardly in a position to "throw stones" at anyone with my own experience of doubling down.  I got myself into a heap of trouble doing it, which is why I posted those comments.

I'm giving you an applause for looking like I insulted you.

[Lucas Scott]

Hey Melf - no worries. I didn't take any offense when I read your post. I'll take the easily earned applaud though! I was more fascinated by the HGSI chart. That was a crushing gap down but it only took 5 months to fill the gap. I envision the DIET chart looking similar as soon as end of summer or as late as next January.

I agree with what you said about doubling down being a route to the poor house. It depends on one's diversification. I have a very diversified approach. When I buy a stock it is usually about 3% of my portfolio. 2 - 2.5% for penny stocks. I am probably too diversified, but I like to buy stocks the way some women like buying shoes. I'm a stockaholic. When I buy I always feel I have left myself room to add a second position if I want to average up, average down, or buy a subsequent breakout.

When a stock drops as far as DIET did, adding a second position is a minor hit to my capital. Say I had 3% of my port in DIET. It lost 30% yesterday so now it's only 2% of my port. Doubling down on it makes it 4% of my port. Only slightly bigger than an average position for me. 

[Melf Elf]

I was more fascinated by the HGSI chart. That was a crushing gap down but it only took 5 months to fill the gap. I envision the DIET chart looking similar as soon as end of summer or as late as next January.

Luke,

I sure hope that DIET works out like HGSI. 

I am probably too diversified, but I like to buy stocks the way some women like buying shoes. I'm a stockaholic.

I don't think that you're too diversified.  You seem to follow you stocks very well.  You're not intraday trading off tick charts.

Love the "stockaholic."  I'm one, too.   I llive, sleep, eat, and breathe it.   

When a stock drops as far as DIET did, adding a second position is a minor hit to my capital. Say I had 3% of my port in DIET. It lost 30% yesterday so now it's only 2% of my port. Doubling down on it makes it 4% of my port. Only slightly bigger than an average position for me. 

I think that's great.  As long as you don't get "handcuffed," like I did, sitting on a bunch of "dead money," watching do nothing, day after day after day after day, you're doing fine.  You're controlling your portfolio.  It isn't controlling you.

I hate to have to give you another applause, you little smart ass, but I absolutely have to.  Applause.


EDIT: It said I have to wait one hour.  I'm signing off, so you get the applause tomorrow.   

[Lucas Scott]

I've just received an e-mail as I am sure the rest of you have. I'll be very interested in the future of this site.

I'll take a guess that the longer-term portfolio will be liquidated and pennies will be back in the SOF portfolio.

From the email:

During the next few days 3SOF will be re-organized into a new structure, also with new team members in a way we think will make this service much stronger.

My guess is the structure change and the new team members are related. I like a good mystery. Maybe David is considering forming a council ("The Council of Elder Traders"), and that council uses majority rule to buy or sell a stock. Or maybe he divides 3SOF into several different portfolios each run by a selected trader. For example, 5 hand-picked traders including himself, each responsible for 20% of the portfolio and with discretion to hold up to 4 stocks in their portfolio at any one time, with no overlapping of picks. Salary dependent on portfolio performance.

It said I have to wait one hour.  I'm signing off, so you get the applause tomorrow.

Dammit in that case you better give me two! jk

[berloga]

  Just like many of you folks here I am a happy loser on diet these days... turned 10% profit into a big loss. Although I am sure there is no perfect remedy against such losses, we should attempt to make some simple trading rules as we go along. The rules can evolve and people with different experience can contribute. For instance:

1) Advice to take profit at a certain point dictated by the TA
2) Close profitable positions that may be at risk right before the earnings are out
3) If hit by a bad report accidentally, get out as soon as you can or on a small rebound that day.
4) If selling at a hefty profit, allow a cool-off period and re-enter only if technicals allign well.

  I know emotions take over when a disaster like DIET hits the fan, but it could be helpful to refer to a simple "code of trading" that had been created on a cool head. Just take a peek and see what the rules dictate.

  I realize that 100% selling or holding through the earnings may not apply so an individual consideration is needed for each stock.

  We need to provide higher protection on the downside and utilize more opportunities on the upside.

  Hope I do not sound too naive.

Cheers to all!   
Misha.

[Holygrale]

Awesome dialogue going on here after 2 big down days.

As one searches for the Holy Grail, and after years of trading, one comes to the conclusion that The Grail is alive and well with the trader that's within us. It's all about experiences as we learn to recover from dreadfull trades like these. Thats what this GAME is all about. Take it from a guy who got spanked on a few trades for over $50k a few years back...........poof! Just like that on 2 stocks that experienced no- limit down days. Talk about .....

Anyways, I too feel your pain, but you too can recover.

Applaud to those who learn to recover and stay the course............

[Melf Elf]

"If we don't learn from our mistakes, we're destined to repeat them"

"When life deals you lemons, make lemonade."

I'd like to try to help you guys do both of those.

Someone on the thread said, "This could have gone either way."  Very true.

Another member have said something to the effect, "I'm making it a rule not to hold going into release of earnings."   Certainly understandable, and not a bad decision at all. 

What I try to do at earnings, is look at the chart and the technicals, and see where I am.  Is there a pattern?  Am I at support or resistance?  How weak or strong are the technicals?

I've taken a look at the DIET chart this morning.  There was a false breakout to the upside three days before earnings, the stock went back inside the pattern the next day, and the low held right at the up trendline, within three cents.

The day before the release of earnings, the stock went well below the up trendline intraday, but it came on at the close and put in a hangman.  The open and close (the "real body') were at the top of the pattern,  and the "real body" was right inside the pattern, "hanging on to it."

YOU MAKE THE CALL: IS IT GOING HIGHER OR LOWER?

We can't possibly know that, because that's knowing the future, and none of us does, unless we're psychic.

All that we can do is look at the pros and cons, and even knowing that, DIET still "could have" gone higher on earnings.

Going into earnings, we can see that:

1. DIET had had a false breakout to the upside.

2. It was well beyond 2/3 of the way to the apex of the Symmetrical Triangle at the false breakout.  That alone doesn't indicate that the stock is going to fail.  It is only one indication of weakness.  One piece of evidence.  It still could have gone either way.

3. MACD was giving the "deadly" signal of 3 failures at, and then from below its signal line.  DIET still could have gone higher on earnings.

Again, no one could have told us ahead of time, in what direction DIET would break out.  And, it's easy to Monday morning quarterback, and say, "Oh, that was so obvious that it was going to fail!" 

Baloney! 

I've seen stocks that have looked just as precarious that did breakout to the upside.

My purpose in Monday morning quarterbacking the chart pre-earnings, is to say that while I understand why some have decided automatically to sell before an earnings release, my own feeling is that we can try to do our best to analyze the chart, weigh the pros and cons, then make our decision about whether or not to hold.

My primary purpose in Monday morning quarterbacking the chart, pre-earnings, is to explain why I said that I would sell at the market price at the open, any time that I were in this situation.  I don't in any way feel that it was an obvious mistake to hold into earnings, because it wasn't obvious.  DIET hadn't clearly broken the Symmetrical Triangle on a closing basis.

What I have found to be a mistake in my own experience, is not to sell at the open on this kind of gap down, and I never will do that again.  Now, that's just me. 

I also feel that doubling down on the first or second day of a gap down without at least seeing the stock find some level of support and breakout above it on an intraday chart is a mistake.  And, again, absolutely no criticism intended, but I feel that it's a panicky response and that the likelihood of succeeding when doing that isn't favored when you're taking a position against a very powerful move in the market.

When a stock is called down like DIET was on Thursday morning, the market is saying "You got your answer."  Yes, it coulda opened down and then bounced.  Yes, it coulda rallied all the way back to the opening gap...blah...blah...blah...

My own feeling, based on my own disasters, is that I can't possibly know how much of a bounce, or if it's going to bounce at all, or how much more "House of Pain" I've got to endure on the downside.  I want OUT.

We all will be holding stocks going into earnings many, many times in the future, so each of us will have to make many decisions about what do.  I've you've decided never to hold a stock through earnings, I sure don't blame you, and there's certainly a strong argument for taking that posture.

I just wanted to "walk through" trying to prepare for and respond to earnings releases, in general, using DIET as an example.

One more chart after this, then we're going to look at "possible" areas of support.