Holding Steady

Despite today being a doozy in the stock market, our holdings held up well. The Dow fell 1.6% and the Nasdaq fell 1.4%. That’s the largest Dow drop since Sept. 22. The cause, evidently, was higher oil and a weaker dollar.

We did fine, though. Maxtor, my biggest holding and the gains I mentioned being most interested in protecting, never hit my $5.50 stop limit. It got to $5.51, a mere 0.4% decline. Even Ultra Semi did well, dropping only 0.8%.

Disney and Sun both fell 2%. In Disney’s case, there’s nothing to worry about. We’re already up 90% and I have every confidence that the stock will push past $30 to give us a double. With Sun, well, I was early getting in. I put my buy order in at $4.20 when I should have waited for $4.05. It got as low as $4.02 today before closing at $4.07, putting us at a 3% loss so far. I’m still confident that we’ll be able to sell at around $4.90 in the near future. One of my readers, Carlos, sent this from Red Herring:

Sun Microsystems’ meteoric rise in the world of IT has taken a nosedive over the past few years, and some wonder whether it will be able to survive the long haul. But no one can dispute Sun’s consistent commitment to innovation: its R&D; budget typically hovers around 16% of gross revenues. No doubt, Sun’s challenges are significant, but its recent lab breakthrough called proximity communications is a promising technology for the chip industry. By moving from wired to wireless connections between chips, Sun’s clever invention is expected to lead to significant boosts in the transmission of data, and hence computing performance.

We’ll see. I’ve thought for years now that Sun is the best bargain in the tech universe, but trading it has been far better than holding it. One of these days, it’ll be a $20 stock again. I don’t think that’s a day coming soon, unfortunately, which is why I still see the stock as a trade rather than as an investment.

It’s interesting that both Sun and Maxtor have been superb trading stocks in the $3 to $6 range. They are volatile, yet each company is real. Often with stocks this volatile, the company is absurd and it’s a game of greater fool. Nobody believes in the underlying companies so it’s just symbol trading. With Maxtor and Sun, the companies have genuine futures ahead of them and the argument for just buying and holding at these low prices is a good one. In the near-term, though, I’m going to trade them with the added security of knowing that the bottom won’t drop out.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • The Kelly Letter
    A Complete Investment Management System
    The Kelly Letter  every Sunday morning by email.
    Like no other. Many subscribers say this is the best read of their week, astonishing in its ability to distill seven days of noise into one succinct overview of the very few items that might matter. Start your Sundays right!
    A one-page Quick Start Guide
    with page number references to full information in The 3% Signal. You'll receive access to this right away so you can begin transforming your portfolio into a performance machine immediately.
    The 3Sig Calculator.
    A thing of beauty! You'll use it to generate your own personal signals every quarter including exact share amounts to buy and sell based on your account balances. It emails you the results to make later quarters easy by keeping last quarter's numbers at your fingertips. Some subscribers say this tool alone justifies their subscription price.
    The subscriber-only section of this website
    where likeminded investors are commenting on notes and discussing in forums. Jason joins these interactions every day. They're a treasure trove of investing tips and wisdom.
    The archive of Kelly Letter notes.
    It’s a research center, searchable and smartly tagged to make gathering time-stamped material on covered subjects easy.
    The subscriber podcast.
    Jason reads every letter word-for-word. This feature was requested by subscribers who prefer audio learning. They listen on their Monday morning commute, during a workout, or while reading along at their computer.

    Save 17%

    Pay as you go
    Or sign up to receive free email and learn more about the system.
Bestselling Financial Author