Comments: This Was Funny At the Time

According to an old saying, successful individuals trade to trade well, not to make money. Seems to me you had ample opportunity to sell high and turn this into a tidy and profitable venture. I'd also wager that technical analysis predicted this ebb in stock price.

Posted by arasfa at December 5, 2007 11:12 AM

Arasfa --

I *absolutely* had ample opportunity to sell high and turn this into a nicely profitable venture, as you said. After all, ETFC recently hit a high of $6 and I could have sold then and made about a 43 pc profit.

But that's not why I bought it. I bought it at ~$4.21 because at the time I figured the stock was at least somewhat undervalued and it seemed like a chance to get on the bottom floor for a long-term play. Now, going in, I knew I had a chance of catching a falling knife and so far, at any rate, this is what has happened. But I figured the long-term opportunities outweighed the short-term risks associated with the volatility. We'll see if I am right in six months or a year or two years. I could well be wrong.

I had talked about this in earlier posts on ETFC and so my expressed annoyance about losing money was not a deep-seated annoyance, but rather a kind of "ah, crap" annoyance. After all, the stock is extremely volatile and heavily traded and so I am well expecting the possibility of a loss -- minor or significant. But I am also hoping for a nice kill -- eventually -- as well. We'll see if that will be my downfall on this one.

As for technical indicators, I am not a market timer. This is not to say that I don't think market timing can work, it's just that I'm not a quant and don't want to spend what little free time I have poring over data and searching out cup-and-handle patterns. My personal investing approach is more human-oriented, and in this case my idea was to take advantage of what seems like a classic case of market inefficiency (as seen in the rise from $3.50 to $6 over the past few weeks). It may be that I missed the boat in not selling at that recent peak, and if there is any blame for that it is all mine. But at this point, my tiny speculative effort is still rooted in the hope for a nice long-term gain (i.e. at least a two-bagger).

But we'll see. In the meantime I am somewhat enjoying watching how this thing swings around like a roller-coaster.

Posted by Benjamin Kepple at December 5, 2007 06:48 PM
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