Friday, October 12, 2007

My STV Diary: Trading takes a different mentality

I've been to Las Vegas once in my life. I spent every waking hour working. It was a conference, seminars all day and night. By the time I returned to my room, it was lights out for two nights in a row. Completely bushed.

I did get to gamble, though. I hit the one-armed bandits and set my limits. If I'm up $25, quit. If I'm down $15, quit. Well, my luck in that empty place was pretty good at 1 a.m. I found myself up $44. Quitting time. Well, maybe not. Maybe I'd play a little more. Before I knew it, I was down $40. I walked out on the losing end. Sure, I'm not quite the big spender, so that was a blow. I didn't stick to the plan.

And so, this week, I found myself trading a stock rather than investing in it. A big change for me, especially after taking a studious approach to investing in recent months — and finding success. Sure, profits in a bull market are nothing to brag about, if you're the bragging type. But straying from great fundamentals, superb growth and technically sound entry points felt like a walk on the moon wearing a big, bulbous astronaut helmet and oxygen tank. So I held my shares of China Digital TV (STV) from 29 (and 32) all the way up to 55.

Quitting time, right? Well... it was like I was back in that casino eight years ago, sitting on a $44 profit, trashing my game plan. And sure enough, the market pulled back yesterday, dragging STV down, down, down from 55 to 41. It didn't help that I slept through the downdraft at 2 p.m. Eastern time. It was 8 a.m. Hawaii time and I crashed out on this couch. Not a big believer in stop-loss triggers, so my profits evaporated by half. Thankfully, my position is small enough that it doesn't kill me when the drop is huge (15%).

Today, the market bounced and so did STV. In after-hours, it is at 49 plus and I'm relieved. Not surprised. Just relieved. If I'd saved some dry powder, or sold near 55, I could've gotten shares back cheap yesterday or today. But we move on, relieved.

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