First good idea

[kimchi]

Edit: I've just noticed my chart image is cropped and missing titles. The middle window is MACD (24,52,18) and the lower one is Williams%R (28).

[ QUOTE ]
Kimchi,

Although I don't understand anything you wrote, I liked it much better than the first TA piece. Here is my take on things

[/ QUOTE ]

That's OK - I don't really understand much of your fundamental analysis [img]/images/graemlins/smile.gif[/img] although I fully acknowledge its validity. It wasn't all TA, I wrote about managing risk too. I was ultimately trying to suggest a better way for your position to be managed and exposing your account to less risk.

How are you managing risk on this position? Since risk is one of the only thing you can control in the market, I believe much of your attention should be devoted to it.

I think perhaps you might see the stock as getting cheaper if the fundamentals were to remain the same, prompting you to want to make further purchases. When you built your initial position, what were your objectives? What were your criterion for selling?

Perhaps you found an undervalued stock and loaded up, but if the market doesn't agree with your valuation (and the market is always right), then there must come a point where you acknowledge that while your analsis was correct, your timing wasn't, and you have to sell to preserve your capital so that you can profit during the times you are right and realise the +EV of your work in the future. Assuming you're down 65% on this stock, you'll need a 285% recovery to return your account to break-even - no easy task.

As I said in the TA vs. FA thread last week, fundamental analysis can provide excellent set-ups but TA privides superior trade and risk management, together with a way to implement disciplined entries and exits. I think using both can be more +EV than either in isolation.

Unfortunately, I know FA about FA [img]/images/graemlins/confused.gif[/img]

[krishan]

Well, in terms of managing risk I'm a bit wild. I think at one point I had a 35% position in DSUP because we thought it was a very good idea. I figured a better idea meant I could take a deeper position. Turned out that might not be a very good strategy.

In terms of exits, a FA exits when the fundamentals change. Until they blew Q3 and posted crappy EBITDA numbers making it clear they were not going to make the 80M EBITDA guidance in '07 I still felt pretty good about a 20-25 price target based on '08 numbers. SO I didn't sell anything until after where I sold half my shares at $6 because I couldn't handle the portfolio concentration given we felt a lot worse about the quality of the idea.

Krishan

[otis_nixon]

[ QUOTE ]
Well, in terms of managing risk I'm a bit wild. I think at one point I had a 35% position in DSUP because we thought it was a very good idea. I figured a better idea meant I could take a deeper position. Turned out that might not be a very good strategy.

In terms of exits, a FA exits when the fundamentals change. Until they blew Q3 and posted crappy EBITDA numbers making it clear they were not going to make the 80M EBITDA guidance in '07 I still felt pretty good about a 20-25 price target based on '08 numbers. SO I didn't sell anything until after where I sold half my shares at $6 because I couldn't handle the portfolio concentration given we felt a lot worse about the quality of the idea.

Krishan

[/ QUOTE ]

So now what weight do you have it at, just curious and if you dont wanna say hey I understand.

[krishan]

[ QUOTE ]
[ QUOTE ]
Well, in terms of managing risk I'm a bit wild. I think at one point I had a 35% position in DSUP because we thought it was a very good idea. I figured a better idea meant I could take a deeper position. Turned out that might not be a very good strategy.

In terms of exits, a FA exits when the fundamentals change. Until they blew Q3 and posted crappy EBITDA numbers making it clear they were not going to make the 80M EBITDA guidance in '07 I still felt pretty good about a 20-25 price target based on '08 numbers. SO I didn't sell anything until after where I sold half my shares at $6 because I couldn't handle the portfolio concentration given we felt a lot worse about the quality of the idea.

Krishan

[/ QUOTE ]

So now what weight do you have it at, just curious and if you dont wanna say hey I understand.

[/ QUOTE ]

16.5K in a portfolio of 196? 8% position.

Krishan

[fanmail]

[ QUOTE ]
Perhaps you found an undervalued stock and loaded up, but if the market doesn't agree with your valuation (and the market is always right), then there must come a point where you acknowledge that while your analsis was correct, your timing wasn't, and you have to sell to preserve your capital so that you can profit during the times you are right and realise the +EV of your work in the future.

[/ QUOTE ]

Managing risk ftw. Very good advice kimchi.