|Stock Market Gains and Losses 2012|
First, A123, what a disaster. This is why long term options may be a good idea. I lost huge on this trade. I lost $1235.08, that's one thousand two hundred and thirty-five dollars and eight cents. I bought in only weeks before they announced bankruptcy. I looked at quarterly reports and things like cash on hand, book value of assets, debts, and the typical value things I think about. I totally neglected the cash flow or profitability of the company. Plus, I have a friend that used to work there. Knowing him I thought it would be a good bet because he does quality engineering, but in my ignorance I forgot to check if he still worked there and turns out he stopped working there a few months before I invested. In other words, I invested because I was looking at old account numbers at a fixed point in time and based on a person that did not in fact work there. The dynamic (cash flow trends) and current picture was not good. Second, I panicked. The day they announced bankruptcy I read their report (this is a more recent update that says about the same thing) and it said that shareholders would probably end up with nothing. The stock plummeted to $0.06 and I sold. A few days later it was more than double that as bankruptcy investors jumped in to see if they could gain any value. Had I just been a little patient I could have saved hundreds of dollars. Developing patience, in the middle of October I spent $1235.08 on that lesson. It's worth at least a few college credits right?
GTAT was another value investment. However, it was in the solar industry and I had to buy more when the price dropped to make money on the rebound. Lesson learned? It was part of the solar bubble which burst, which sector in general might now be oversold, but that depends on things like carbon tax or government subsidies to renewable energy technologies. In other words, the actual target price of renewable energy sector companies depends on political realities currently. However, I expect the scientific reality of pollution to make renewable energy a more commercially viable business in the future.
Finally a note on short term gains and losses. I expect more in the future to own companies for longer amounts of time and have mostly long term gains (and inevitably losses), but being new to investing I felt the need to get some sales under my belt and book some gains.
Disclosure: I am long AAPL, DHT, GRVY, and USO. Some of those are also value priced right now so I might buy more of any of them in the near future.