Tuesday, October 14, 2008


Since I did not care for the 20% drop intraday in AGC after I bought it the other day, forcing me to do an average down at 4.6 soon after I bought it, I just disgorged all of it for a small profit at 6. On INZ, I may sell 1/2 of it soon and keep the lower cost shares. Since I use FIFO accounting, the first 50 shares of INZ at around 10 would be the first to go and the second 50 shares bought at 7.8 or so would be kept. The first buy at around 10 was made on 10/08 and the second one on 10/10 which has now almost doubled in price. I am not in any hurry given the high dividend rate on this preferred stock issue from ING based on my cost. I would be more inclined to hold the shares bought at around $7.8 for a possible long term capital gain rather than selling it now for a short term capital gain taxed at much higher rates.  So by averaging down only on this kind of security, my first sale will always be the highest cost shares which would generate the smallest gain for tax purposes using First In First Out accounting. 

I also just sold the 200 FAX at 4.27 bought last Friday at 3.38. I may use those funds later today to implement the following.

With a slowdown in the economy being evident, there continues to be a wholesale dumping of large tech stocks which is find with me since I do not own any of them, and do not consider my current 40 share lot of EMC to be a position worthy of note even though I just noted it.  I am only now starting to look seriously at some of them including Intel, EMC, Oracle, Nokia and Microsoft. I just reviewed a bunch of reports on Intel including ones from S & P, Argus, Morningstar, and Value Line.

As quarterly earnings disappoint in the weeks to come, these stocks may decline further but I have no idea when that will stop. The market has not changed in its desire to punish a company for failing to meet a quarterly earnings estimate or struggling during tough economic times, nor will that short term thinking likely change. The sometimes predictable behavior of others only creates in my view a buying opportunity that I have not seen in these stocks for some time. I missed the bubble in 1999 to 2001, given my conservative nature and natural aversion to parabolic moves in any asset class.  Show me a parabolic move and I will show you a sell by me into it. At this juncture, I can only make a judgment on a decent  entry point to start building a position in some of these tech names, and then try to deal with the uncertainty by simply buying small lots as time goes by. So, I may start this process today with either Intel or Oracle if the selling continues into the close. The selling now is based on the realization that it will take some time to resolve the credit crunch, for money to find its way back into the economy, and to recover from the slowdown that has already started.

In these blogs, I am acting as an unpaid financial journalist and an occasional ornery political commentator.    This is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase. I will try to identify my sales too but it may take a few minutes after I implement them to create a blog explaining my reasons.  The sale may before or after the blog.  The sales of AGC and FAX occurred just prior to writing this blog whereas  a partial sale of the INZ position has not yet occurred. In this blog, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all blogs written by me may not be suitable for others based on their unique financial position and risk profile

No comments:

Post a Comment