Dell is puking down today based on news last night after the close. I used to own this stock for clients. I doubt my reasons for owning were unique in any way.
I sold half the position last October at $32.07 as part of a small get defensive trade I made. I sold the balance in January at $29.96. The second trade was me throwing in the towel.
The stock had gone down a lot before I sold but it got to the point where I knew I was wrong about the company's ability to swim upstream against the other big tech companies.
It is human nature to struggle with taking losses. I have trained myself to focus on what I think will happen to a stock not whether I am up or down. Up or down is more about where a stock has been which is precisely the wrong thing to do, strategically.
This all ties into the idea of being wrong. You will get certain picks wrong. There is no avoiding being wrong. A balanced portfolio should minimize the consequence of when you are wrong. I turned out to be wrong for being in the name but was right (for now) in selling when I did.
If you own stocks that you think you should give up on, you are probably right. One word of caution, if Dell's price action was not worse than the rest of the sector it might have been a different story. If a sector is down 20% (that is rare of course) and a stock you own within that sector is down the same 20% I'm not so sure it is a sell. No matter how poorly a sector does I am not going to be zero weight. Hopefully I would already be underweight a sector down that much before it dropped that much.
3 comments:
And the DJI continues towards an all time high despite the performance of MSFT and INTC. Maybe large cap is making a comeback?
YTD the DOW is up 8%-9% while IWM is up better than 15%.
For the last month the dow is up a little over 4% and IWM is up a little less than 4%.
The DOW is not my favorite large cap proxy. In the last month UTX is up 13%, MMM and CAT are both up 8%. The performance of those three are probably the difference. And all three have market caps below $100 billion.
So maybe large cap-ish is turning but the threshold for mega cap is usually $100 billion and for now that segment still struggles.
I don't quite understand why Dell matters so much. I mean Apple is kicking butt. So is AMD and Brocade. It seems like old tech is losing out to the new order. Tech is still great. I am liking GRMN and OVTI in this space.
-- Faisal Laljee
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