Monday, March 3, 2008

Taking a Loss, Firing the Boss

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.


Rick Bylina said...

You eaten dog food yet, AC? With my portfolio, I've had to dine with Sydney, the cockateil, a few times. Fortunately, he just pecks at his food.

When's the book out? I tried pre-ordering, but no dice.

Austin Carr said...

No dog food YET, but I saw a gourmet dog chow advertised the other night on TV that made my mouth water. Some kind of beef stew with real shredded beef and vegetables.

Apparently, I will know Big Money is published when some books arrive on TFA's doorstep. At such time, I will pass along the word.