John, When I see a cyclical stock that is down big time, I typically buy at what I think is 25-50% undervalued and then just hold on. I tend to add thirds as it declines, though the last third I added in FLC was up a point from the first one. I have one more third to go, but I probably won't pull the trigger unless it hits $10 and change.
The trick is, with my cap app fund, is to buy low and go for the homerun. However, the entire cap app sector only represents 10% of my portfolio, so I am very underweighted. That gives me much more courage to hold on.
I do cut losses if I think the story has changed. It hasn't with FLC. I knew the oil patch sucked when I bought it. Just as I knew that platinum sucked when I bought SWC at $21. The system I use is to buy a diversified list of cheap stuff, which is not necessarily just US stocks, and let it rise like yeast. And if it doesn't, then take out a high powered rifle and shoot down the mgt. like a bunch of dogs. <G> A truly Texas solution.
MB |
