"Relative Safety" bit me in the butt. Here's a portfolio move I made last year that made sense at the time. In the end, however, I really hosed myself. What did I do wrong? How would you have played it.
January, last year, I sunk money into an Israeli ADR called Nice Systems (NASDAQ:NICEY). They're involved in an area I know quite a bit about, digital recording systems. The risk was high as the stock really does fluctuate with political activity in that geographic area. Plus, it was a very young, developing company. Still, I understood their tech, and knew they had an edge on their competitors. 5 months later, after a 35% gain, I put the proceeds into ADPT. NICEY was still doing well, but I wanted something I thought was more safe and stable.
My reasoning was that ADPT had a long unbroken string of profitable quarters. They had a strong lock on their market (SCSI peripherals). I wanted the "apparent safety" of a more established company. Plus, they had a diversified product line, and had the top products within those lines (CD-R software, for example). The stock was in a downtrend and seemed a good value.
After about 4 months, I had a gain of about 63%. Then, Fall came -- ADPT started falling gradually. "No problem", I thought. They had survived some woes that the correlated DD sector was having. They still had a solid business. Then, Winter came, and I took a one-day hit of 40%, and then it just continued to get worse and worse.
NICEY, meanwhile had continued climbing through the year, to the tune of about 160%, and even now hasn't been hit too hard by the market downturns of the past several months. They're still way ahead of where I started. Alas, I'm way behind from where I started.
Is it just a simple case of being too greedy, or is there a more specific answer as to how this could have been turned around to my benefit? |
