>Would you mind explaining your strategy?
> You've realized all along that TMSR is a POS, but you (wisely) >refrained from shorting any stock until just now. Me, on the other >hand, woke up one day and said "Holy Cow, this POS is 'way >overvalued, I must short immediately before people wake up and it >crashes back to earth!!"
>What made you wait so long before shorting, and what triggers your >shorting now??
Well first of all, I didn't just wait until now - I shorted back right back before the last 10Q as well. Then I covered when I got back from my vacation. *Then* I waited until just now. What triggers my shorting is I know full well that the fundamentals can't possible justify the growth in the stock, as today's figures once again showed. I got some more today at 20 1/4, but I doubt I will bother tomorrow unless it pops up for some reason now - the figures were poor, but not enough to scare longs or shorts drastically either way. Normally I would, but I am starting to eyeball some of the big name stocks that are dropping again (AOL, CISCO, etc.) Doesn't mean I might not though.
As far as being "wise" that only is because I have done very similar mistakes in the past - wisdom only comes through error. :-) For shorting here's some simple rules I follow:
1. Don't short using margin (initially) - assume the stock can double and leave you okay. (I think you have that one, or you would already be toast now. :-) )
2. Don't short all at once.
3. Don't assume that idiots that drove a stock up beyond all reason won't be idiots on the next day. (What you see as obvious may not be to the next person - I am sure their are people who still think telephony is a pretty new thing)
4. Don't short until you have good reason to believe the stock will fall shortly - i.e. bad or disappointing news - if you are shorting because of just because of a run-up get in and out quick. The latter is daytrading, and I don't think that is your (or my) style.
5. Don't be afraid to accept a real loss.
6. Don't hold a short when a temporary bottom has made itself evident.
I refrained from shorting in early January, as I believed that it wouldn't do much until the earnings, and I didn't want to be run over by some random press release for dummies (if you remember Dec and Jan, you know what I am talking about).
If I remember correctly, you have had this since Dec and then kept averaging up. Here's where you could have improved - you should have recognized that the 10-12 range was the farthest it was going to fall after the first 10Q (because it bottomed there and bounced back and forth) and covered *all* of it, with part of it at a loss. You were obviously thinking "Well, it's going all the way *now*" - but as per #6 above it wasn't and you just put yourself at risk for the unknown: possible positive news. Just always keep in mind wash sales, and make sure that your cover was 30 days from any other similar transaction. Then you could have waited, as did I for this time - which would have given you the 30 days the other way to allow you to still claim the loss. This is the strategy I believe Shom. over in Yahoo did, as I believe you shorted at similar times. What he has over you is that both of you will get your money back, but:
a. he gets to make more money as he didn't ride the stock up to this point
b. he gets to claim the loses of his original transaction and saves money on taxes as well
Now of course you had no way of knowing that it would climb to this ridiculous height, but you could have safely assumed, as did I, there wasn't anything going to be released until the 10Q that would kill the price - the company sure isn't going to admit anything wrong. I was, as you can check in Yahoo, simply assuming that it wasn't going to go anywhere fast, so I didn't even wait for the 10 I missed while on vacation - I took the 11 and 11 3/4 - trying to get the bottom(or top) will kill in in the long run. I was hoping for 14 and got an average of 20! ( I shorted some impatiently at 18 the other Thursday, afraid it was going to fall then - my mistake, but since I only shorted *some*, not all of what I wanted, it illustrates the advantage of not trying to get the "best" price, but an average "good price" with several blocks - again compare my 20 1/4 limit with your 21 1/2 today - you were again trying to get the *best* price, I wanted a guaranteed lot at a *good* price)
Just don't kick yourself - at least in your case you *will* eventually get most if not all your money back. Anyone that says that they never made some really bad blunders is either a liar, or has never really played the market. I bet already that you won't ever do the "Holy Cow" move again, eh? The hardest thing is when you hold yourself back because of caution, and it turned out to be a very profitable move after all and you missed it, forgeting the wisdom that stopped you in the first place. Case in point is why I didn't buy the stock at 14 after the pre earnings press release, knowing it would probably climb. In retrospect it was the right thing to do, but I didn't have confidence that it would be that fast or this high - it outperformed the choices I did make. However, I still made money and more safely, overall.
You might want to think about, as you stated you had money to short (maybe you caught some today?) using that high block for trading - again don't wait for *the* price, but a series of good prices. Cover it a price that gives you sufficient gain for you personally (don't be greedy) and then try to catch some at a point or two above a little later. If it continues to drop? Oh well, you are making money with what remains. Short sales are obviously going to be subject to short term capital gains anyway, so taxes aren't an issue with this. either. Do this several times, and you might squeeze 10-30% more out of the stock on the way down - this isn't daytrading, but it does take more time to watch however. (I am talking swings over days, as we see so often on this stock.)
Hope that helps a little, and that I didn't ramble too much. Remember you already have experience that relatively few people have, just don't forget it. Let me know if you have other questions - maybe I could save you from other mistakes I have also made. :-) |
