It was a rather sad day in a way, because LDK had been up more than 100% for us... for several weeks... before finally triggering our trailing stop (having sunk 25% from its high).
I couldn't help but smile when LDK rose about 5% the very next day... But we stuck to our guns. When you sell, you sell... Stick to your discipline, even when it hurts I say.
But who could have predicted what would have happened right after we sold at $53 levels?
LDK's Sudden, Shocking Free Fall
Since then, the stock went into a freefall... sinking into the low $40's before bouncing back some today... some meaning about 19%.
Still, the stock is trading around $44 as I write... well below our exit price.
Unfortunately, a former official at the company has announced that he believes LDK's technology is not up to snuff... and a Midwestern lawfirm has filed a class action lawsuit against the company on behalf of shareholders!
The suit alleges that LDK management overstated the company's profitability, and therefore defrauded shareholders (some of whom have booked 95%-plus gains). Who knows whether there's any truth to these allegations?
The lawsuit was just announced, so we'll have to see how it plays out.
However...
This could have been pricing into the stock before the news even went public... illustrating the opacity of the markets, especially when it comes to individual investors (and perhaps lending some small credence to Burton Malkiel's nefarious efficient-market flapdoodle).
For more on the lawsuit against LDK, visit:
http://biz.yahoo.com/bw/071009/20071009006638.html?.v=1
This just reaffirms my commitment to our Green Investments system... whereby we place trailing stops underneath certain positions to lock in gains as they come, and to ensure that we never lose our shirts.
Our System Is Functioning Perfectly
To read more about this system, please read my prior post on the topic:
http://greeninvestments.blogspot.com/2007/10/why-we-use-trailing-stops.html
Anyway, it's not often that you see one of your former positions soar almost 20% in one session... and breathe a sigh of relief for having sold it... But this is one of those rare days.
Let's hope LDK irons out its problems (which could be at least half PR-related) and gets back on track. If it does, we might re-enter the position at a later date.
Till then, good trading all,
James
No comments:
Post a Comment