Good morning and welcome back to the bird feeder where the sparrows fight over the shells that the big blue jays leave behind.
Zagg’s a drag. The report last night was awful, as the company missed topline and bottomline estimates by a wide mile and guided the year’s estimates lower. That means that the management is not executing. As I’ve said from the beginning in this trade, a double in this one depends wholly upon management delivering that they’d promised. They failed. Which means I failed in this trade. Mea culpa. I don’t want to crush this one by selling all my shares all at once, as this thing is low float and small cap, so I’m letting you guys know first before I exit my own. I’ll sell all mine by the middle of next week. One of the most valuable lessons I have learned over the years and one that is why you subscribe to this service is the “cut your losses” idea. ZAGG was a small position for me already but I’m going to cut my losses on it and move on.
Meanwhile, the stock market bubble continues to blow bigger. And that segues me to another important concept — while the short-term traders and most aggressive risk-takers out there amongst you guys can continue to ride this short-term momentum, successful investing over your career is probably not going to be defined by you being aggressively long as markets are hitting new all-time highs and are up huge on the year already and seem bullet-proof for now.
There will be another EU debt crisis and there will be other things that cause the market to pullback. At some point. I do think the set-up remains bubblicious and that the bubble is likely to keep getting bigger for at least another year or two, but great traders usually want to sell a break out and buy a panic. Don’t let your emotions, your greed, your envy drive your trading and investing.
The markets seem impervious to any selling and it feels great to have stocks going crazy and it feels like you should be even longer, right? Make the hardest trade. Do exactly opposite what your emotions are telling you. Remember how hard it was to buy when the markets were down 10% in a straight line last summer and panicky headlines dominated the world’s news? It’s not like that right now, is it? Don’t get bearish, and don’t get short either, just let your long positions do the work for you. Don’t go getting aggressively long or chase this momentum.
From an overall portfolio management approach, we simply will be best-served by continuing to be patient and fearful when others are greedy. To sell high and look to buy lower again later. Cut your losses. Let your analysis and contrarianism drive your moves. All this comes together at times like this.