My Day-Trader Experience.

In my end of October post I mentioned starting two try-out positions in Amarin and The Trade Desk. My position sizes were 0.6% and 1.7%. The two try-outs had very different outcomes. I sold out of Amarin by November 9th at an average price of $22.75 (I had bought it at about $19.40 a couple of weeks before), and bought a lot of TTD, building it up into a 7.7% position currently.

I had quite a little adventure with Amarin. Why did I sell out of it. Several reasons, six in fact.

First, the CEO, on the earnings conference call, sounded to me like a huckster pumping the stock. (Just my opinion).
Second, they seemed like a one-trick pony. When anyone asked about pipeline of future products they kept saying that they were putting all their effort into this one.
Third, they indicated that they’d have to raise money (sell more stock or take on debt) to be able to build their marketing effort to increase sales (hire more S&M personnel), so they stated that it would be a while until they had positive cash flow (and I felt it would be a risk if they ever got there).
Fourth, while their product was approved, its market seemed smaller than they thought, and their patent runs out in 9 or 10 years.
Fifth, they had already run up 600% or 700% in the last month or two, since they had pre-announced their results.
Sixth, all our great companies were way down, so I sold Amarin for cash.

In fact this was a very, very clear Sell in my opinion. I sold at $22.75. I had no idea that when they announced their great study results officially a few days later, that the shorts would attack, saying that the placebo they used in the study, with mineral oil in it, biased the results, which I thought was far fetched but which would cast a cloud on the results which would be hard to totally remove. Indeed in the premarket it was down to about $16.00. That was down 30% from where I sold it, and I thought that that was a ridiculous response to great results.

Then I read a press release (I think it was), that said that 85% of the cardiologists at the conference said that they would prescribe the medication. And I read somewhere else that the audience stood up and applauded after the presentation. I thought that was good for a bounce at least, so I bought back half of my position (0.3%), still in the pre-market, half at $16.20, and half at $17.60 (it was moving up as I was buying), while I took time to re-evaluate. I thought about it, read over those six reasons for selling, and decided that the company may do well, and that the stock may do well, but that that was possibly way in the future, and for the meanwhile I had much better places for my money. I sold that morning, shortly after the opening, at $18.04. Its current price is $18.15.

That was my lucky one-day experience as a day trader.



Despite the fact that you traded in and out within a day’s time frame, I don’t think it’s correct to call the experience “day trading.”

I’ve never been a day trader and I’ve not really looked into it, but from the little I know, “day trading” is completely focused on watching moment to moment chart moves of stock prices. There is little or no concern for the particular company, what they do, what product/services they offer, past performance - none of that fundamental business activity is of any concern. As I understand it, day trading is entirely based on stock price speculation.

Your decisions to get in and out were made quickly, but you based the decisions on the business. Just so happened that they were profitable decisions, but I trust you would have made the same decisions even if you had lost money on the transactions.

You remain the smartest investor I’ve ever paid attention to. I’ve yet to read about a speculative transaction you’ve made. There probably are some, maybe in your early days, but you’ve not written about them to the best of my knowledge. Though I’ve probably missed a few of your posts.

Don’t worry Brittlerock, I was just being humorous in referring to it as day-trading. I reacted entirely to fundamentals and to news specifically about the company, and I didn’t look at a single graph. And I would have done exactly the same sale if it was at a loss.

Way to go Saul.

I think luck is part of investing. But when it seems like some investors (ahem … like Saul?) are consistently lucky, I’ve come to conclude that much of the time it is a result of paying close attention and being an astute investor.

My recent day-trade didn’t turn out as well.

After months of firmly resisting buying NVDA shares due to my belief that in the end they are truly a hardware manufacturer, in spite of their wonderful R&D and product development record, I recently relented and bought a medium-sized position. That, of course was the day before it dropped like a rock again, so I sold in the after-hours market.

And that, my friends, is how you learn a lesson – for the tenth time – “the hard way.” When a lesson costs you $10k or more for a one-day seminar, it’s probably one you won’t forget for awhile.

Regrets? Sure, I’ve had a few, but they are quickly forgotten as there is nothing gained from regrets.

Dan, often lucky, sometimes not. Lately not so lucky. :frowning:

I actually bought NVDA at $234 a share on Feb 7th for the first time. I then sold it on April 2 at $220 a share, as a result of the crypto fall. I expected it to have an impact on NVDA. I don’t buy into the whole “NVDA is better than AMD therefore an oversupply won’t impact them and besides only $9 million of their sales were related to crypto” when they can’t even keep GPUs on the shelf.

However for quite some time I thought I was wrong as NVDA marched higher and I thought if their datacenter revenues keep growing it could offset weakness in commercial graphics cards. I contemplated buying it before their current earnings but went against it and bought another stock instead.

There are plenty of hardware companies that are just fine. INTC for example. or XLNX. Xilinx and Altera have a near duopoly in the FPGA market. Xilinx just recorded 70% gross margin in their last quarter. I would never disregard it because it is a “hardware company.” It too has similarities to NVDA where you have to program them correctly and NVDA and AMD GPUs are not pin for pin compatible, but when buying from Xilinx you only buy FPGA that you put on a circuit board, when you buy an Nvidia Graphics card it is a circuit board it goes into the same slot that an AMD graphics card goes in. They are completely interchangable. That creates the commoditization aspect of NVDA. Regardless if they have better performance figures than AMD.

Look at the revenue by year. NVDA sort of plodded along until 2016.…

This is why I have zero interest from NVDA for the gaming market. Unless the gaming market suddenly changed over the past couple years, I don’t see the rationale for being invested in NVDA for a market perspective. We talk about companies like TTD or NTNX being in markets growing at 30% YOY or whatever when the gaming market is already a mature market. It is the datacenter market that is of interest. That is not only a growing market, but there should be a little more “stickiness” for the applications rather than just switching out a PCI card for the competition’s.

I realize this can come off as Monday quarterbacking but I do believe we should look at what kind of hardware companies we’re talking about before we toss them all to the side. The more difficult they are to switch. I do believe NVDA has that opportunity in the datacenter markets but at this point I’ve got to figure out where the market will even be by the time this crypto carnage works it’s way out.