In our minds,> we think ourselves able to know exactly when a stock is likely to break out, allowing us to load up on shares just before the pop and immediately dump them just as the masses are rushing in.
Unfortunately, it rarely works out so effortlessly. Markets are on nobody s schedule but their own. Even with the most diligent study and technical timing, we often end up not necessarily wrong on a stock, but very, very early.
Such has been the case for me with Sony (SNE),
Yet even with the historic multi-month rally in equities, Sony has been less than cooperative. Even as beaten up financials like Citigroup (C)
In recent days, Sony has finally pushed higher, turning what had been a modest loss in my portfolio into a small gain. And even though my original motivation for purchasing shares expectation of a spin-off or other transformational effort from CEO Howard Stringer has long since expired, the fact is that I still own the shares, which are now being held as a winning trade.
As we always like to point out, the real money is made on the big moves. Once a market finally begins confirming our outlook, it s in our best interest to stay with and in this case, actually add to the trade.
I mention adding to the trade because my original position size, roughly 1% of assets, had been whittled lower over the past year as new deposits and gains on other trades expanded the size of my overall account. Suddenly, Sony is now less than 1% of my portfolio, too small to have any meaningful impact on my results, even if Cloudy with a Chance of Meatballs continues raking in big bucks at the box office or other Sony properties churn out a profitable Q4.
Nana korobi ya oki - ( Seven falls, eight getting up )
Sony (SNE) 4-year>
So as tempting as it can be to simply dump shares once you re "back to even" on a former loser, it s precisely then that I advocate adding exposure, bringing the trade up to a legitimate position, at least a minimum of 1% of your portfolio. If you aren t confident enough in a trade to have at least a 1% exposure, you might as well skip it altogether. With a tiny sub-1% position, even if you re right, you end up not making any real money on the trade.
Sony is massive, with some $78 billion in revenue from electronics, gaming, movies, music and financial services. Shares are still down 50% from highs reached just two years ago, the herd is conspicuously absent and this weekend s coverage in Barron's can be viewed as a bullish contrarian indicator.
Sometimes, because of our own poor sell discipline, what we think will be a short-term trade ends up being a long-term investment. That was my original sin with Sony. But on those occasions where you re patient enough to wait around for a stock to finally make its move, make sure you ve got a large enough position to make it worth your while once the time comes.
Your New Motown Pad Now 90% Cheaper
Bricks-and-mortar real estate isn t really my game. But I was shocked by a statistic published in this weekend s Wall Street Journal. According to real-estate research firm First American CoreLogic, the median selling price for a home in Detroit is now an impossibly meager $7,100, down from $73,000 in 2006. This is a loss of 90% in three years dotcom crash-style markdowns.
S&P/Case-Shiller Detroit Home Price Index
It s not hard to understand why: Detroit, at the center of the auto implosion and Midwest manufacturing recession, has been badly hurt. And just because prices have imploded doesn t necessarily mean they ll rebound anytime soon. One can t help but think of former mining communities on the American plains which, even 100 years after their heyday, are still nothing more than ghost towns.
Still, one can t help but imagine there might be a value opportunity for intrepid investors willing to take the risk. Unfortunately, CME Group (CME),
I m generally not a value-oriented investor. But considering you can buy roughly 33 homes in Detroit for the cost of the average residence nationwide, the Motor City might be the ultimate contrarian play.