10/08 news letter
*** Market
It is definitely one of the bearish weeks in a year. Just as everybody got zealous about energy stocks, Wall Street decided to sell, and sell big... XLE (SP500's energy sector) was hammered by 10% in just 3 days with a 100% turnover on Thursday. Amazing volatility. My 10% beat over SP500 is short-lived. Now I only got 9% lead. This is again a warning that even in a bull market, you can lose money due to volatility. It is just a mathematics that Wall Street plays all the time.
*** PDCO
As I am checking my portfolio this morning, I found the latest news that PDCO is promoted to SP500 to replace the defunct Delphi (auto parts manufacturer). I bought a small position of PDCO about a month ago. PDCO is a dental equipment reseller. Its long term performance has been extremely stable. A straightline movement of 20% per year. As a risk-averse approach, this is the best kind of stock I want.
However, there is a caveat to this. 20% gain with 20% volatility is a very difficult game to play. You have to buy at the bottom of the curve. Otherwise, you have to wait more than a year to glean on the growth. Therefore, I hesitated. Two months ago however, PDCO began to turn bearish. It missed its sale target and the stock was hammered down to the unusual 25% stop. That is where I bought the stock.
It was not a easy call. Based on its past performance, it should be a solid company. But if you checked Yahoo news under PDCO, one class-action suit after another, acusing management security fraud. S&P maintained "sell" option. However, late September, S&P changed its opinion. PDCO is placed in "buy" category. And yesterday, it is promoted to the list of SP500. This is a recognition of its fundamental (but not a garantee of stock price). What a world !!!
Enjoy the roller-coaster of October market...
--Steve
It is definitely one of the bearish weeks in a year. Just as everybody got zealous about energy stocks, Wall Street decided to sell, and sell big... XLE (SP500's energy sector) was hammered by 10% in just 3 days with a 100% turnover on Thursday. Amazing volatility. My 10% beat over SP500 is short-lived. Now I only got 9% lead. This is again a warning that even in a bull market, you can lose money due to volatility. It is just a mathematics that Wall Street plays all the time.
*** PDCO
As I am checking my portfolio this morning, I found the latest news that PDCO is promoted to SP500 to replace the defunct Delphi (auto parts manufacturer). I bought a small position of PDCO about a month ago. PDCO is a dental equipment reseller. Its long term performance has been extremely stable. A straightline movement of 20% per year. As a risk-averse approach, this is the best kind of stock I want.
However, there is a caveat to this. 20% gain with 20% volatility is a very difficult game to play. You have to buy at the bottom of the curve. Otherwise, you have to wait more than a year to glean on the growth. Therefore, I hesitated. Two months ago however, PDCO began to turn bearish. It missed its sale target and the stock was hammered down to the unusual 25% stop. That is where I bought the stock.
It was not a easy call. Based on its past performance, it should be a solid company. But if you checked Yahoo news under PDCO, one class-action suit after another, acusing management security fraud. S&P maintained "sell" option. However, late September, S&P changed its opinion. PDCO is placed in "buy" category. And yesterday, it is promoted to the list of SP500. This is a recognition of its fundamental (but not a garantee of stock price). What a world !!!
Enjoy the roller-coaster of October market...
--Steve
posted by Steve at 11:13 AM
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