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November 10, 2011
Edited: November 11, 2011
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The correct valuation of a stock is what the market gives you when you buy or sell
Rest is what every one thinks WHAT IT SHOULD BE.One Simple Example is CLX - it popped to $76 and stayed in that range for a number of days. Now it is sitting at $64. There is no fundamental change in company's product line or earnings. When it popped up Ichan wanted to buy the company. Now he is liquidating his purchase in CLX. So as a smart investor one has to decide to buy or sell or stay away.
From June 2010 to June 2011 TZOO went going up like a clock work from 15 to 85 meaning 550% gain. I did not think it was a value play above $40 and just watched it go up. It formed double top and came crashing down in 70 days. One could have made tons of money with right strategy. if i had gone short when stock was going up at 45 - it would have been a whopping $40 loss per share. Or if I bought when it was going down in last 90 days - the result would be a big loss
My best trade for the day was trading WHR calls. I had bought some calls when stock missed earning numbers and averaged down by adding calls. It ended up in profit todat=y and decided to cash out for 25% gain - then bought back at 2.87 and resold at 3.10 for a quick additional 6% gain
NFLX is another similar story. I did not take adavange when it was going to moon or took a fall. I took advantage when it hit 125 on down side and made some money by buying some puts. i looked like consolation price or a Bronze - still can not complain. i did wrtie couple of blogs at that time.
