Tuesday, October 30, 2007

Of Falling Knives

This isn't a brag. I suck at picking stocks.

I watch Cramer for advice, and he's great, but he gives way too many recommendations for someone with my limited means to follow them all. Which means I have to use my own judgement deciding which ones to pursue, and that's where the problem comes in.

Somehow, I routinely jump all over Marvell while taking a pass on Apple and Allegheny Tech.

But rarely, very rarely, I do get one right. And that calls for a little self-congratulation.

Here's what the chart of Goldman Sachs looked like when I bought it*:

That's a falling knife if I've ever seen one. I don't make a habit of trying to catch them, but I figured this was a good time to start a position. I'd buy a few shares, wait for the stock to go down a few points, then buy some more...repeat this a handful of times and eventually when the stock starts to move up again, I'd have a low averaged cost basis.

But something funny happened...the stock didn't continue to go down. In fact, it went practically straight back up, 80 points up. Here's what the Goldman chart looks like now, with my entry point of $165 marked in red:

I haven't nailed a bottom in a stock like that, well...ever. That chart is pretty fucking sexy. It's not Monica Belluci sexy, but it's definitely a close second.

Bought a little Procter today on the same premise...planning to scale into the stock as it slides. Who knows? Maybe lightning will strike twice.

*As you can tell, that's just a current chart of GS that I chopped off at the date of purchase, not an actual chart from that time. And yeah, my photoshop skills suck.


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