As noted Friday in our HOT TIP ALERT (scroll down), I couldn't take it anymore after Thursday's action in DISK. I sold our Dog Of The Year (top chart), Open Energy (OEGY) at a huge loss, to buy DISK. Truth is, this disaster belongs to our trading account's previous management, The Famous Author.
I'm running things now, and I like DISK. Here's why, and I'm quoting the only guy we know who accurately called the current mortgage disaster over a year ago:
"Look at this chart (left). The story's right here. DISK had a merger deal for about $4 a share, but the deal fell apart at the end of January. The stock crashed. Now some people are thinking, hey, this company was looking to sell out before. They signed a deal. Sure it fell through, but maybe another deal is in the wings."
Here's the ugly numbers on our switch: We sold 10,000 shares of The Dog for $3,605, less commissions. Added to the $1,092 we had in our cash account, those Dog proceeds were enough to buy 2000 shares of DISK (at an average price of $2.15), pay our commissions for several buys, and have $340 in cash left over.
We took a $3,000 hit on The Dog. Shame on you, TFA. That's a 40% hit on our capital.
Current assets are 2000 shares of DISK, plus $360 cash, equals $4,660, down $2,840 from our original $7,500 capital.
It's ugly, but it's over.