Five very cheap stocks

This made me toy with taking the equivalent of one full position, and dividing it among the five.

Doesn’t sound like the thoughtful evaluation of the individual companies that I would expect. In particular, it seems to me that GILD is a very different story than the rest.

Doesn’t sound like the thoughtful evaluation of the individual companies that I would expect.

Wasn’t meant to be a thoughtful evaluation. Twas meant to be five very small speculations, IF I had done it, which I didn’t.

Saul

Saul,
Thank you for your reply
I tend to agree with you that now is not the time to sell these stocks, but what I admire about you is your ability to cut the cord!

If a stock doe not perform or you read about some news that might indicate some kind of trouble, you get out.

I can not talk for anybody else here, but I catch myself watching and not pulling the trigger.
An example is LULU, I liked the stock (around $60) because I saw my wife buying a lot of their cloth, it was recommended in SA or RB, I don’t remember. Then they run into problem with their yoga pants, stocks goes down, I buy some, as I believe in their product. Stock goes down further because of stupid remarks from their founder/CEO, I keep holding my shares and even write some Puts; stock collapse I bail out and 3 months later the stock is above $60.
I am my worst enemy!

These things would not happen to you, you probably would have gotten out right away and then reassess the situation, maybe bought in at lower levels again.
I love the way you invest, but I am not capable of doing the same.
I hope to see you in Alexandria in March at the Fool Fest, Erik

An example is LULU…

Hi Erik, LuLu was at $82.20 a year and 8 months ago. Yesterday’s close was at about $65 something. That’s down 20% from the high in 20 months of a rising market.

By the way, I’m often wrong about these decisions. I’ve gotten out of plenty of stocks that have then gone back up. But when I sell out, I reinvest the money in other stocks, and hopefully, they will go up too. That’s why I bought them.

Saul

Sorry, if that sounded critical … it is just that I am used to seeing such thoughtful decisions from you that this seemed flip.

Sorry, if that sounded critical … it is just that I am used to seeing such thoughtful decisions from you that this seemed flip.

Hi Tanhas,

I actually posted the five stocks not for those five specific stock, but for them as example stocks. In other words the question was “Do you try to buy bargain stocks that have been beaten down (often for good reason) and hope for a rebound, or do you stick with stocks whose premise is intact and healthy)?”

I find that I am of the second school. I don’t try to find stocks who have crashed and hope for a turnaround (think SZYM), but rather stick with intact stories (think BOFI, CELG and WAB). That’s just the way I do it, but there is room for all kinds of approaches.

I did toy with the idea of a basket of losers, but turned it down, as I said. However, I took a quite small position in UBNT again.

Best,

Saul

3 Likes