Friday, July 29, 2005


Cobra bites its skeptics

I had expected that PCTI would carry the ball today after last night's terrific earnings report. Even though the stock did close today 50 cents above the price at which bought it in afterhours trading yesterday, I was on the whole disappointed that it didn't move even higher.

However, where PCTI left off, COBR took off. Cobra is one of my biggest holdings and it didn't disappoint this morning when it delivered a stellar earnings report. Once traders had digested the good news, the stock moved up 25 percent. As I normally do in situations like this, I took some profits, selling 1/3 or my position.

I find that this sort of selling rule works well for me: if a stock moves up nicely, I take some profits by selling between 1/3 and 1/2 of my position. If the stock comes back down, I repurchase the shares that I sold for a profit. If the stock keeps moving higher, I sell the remainder of my shares for an even bigger profit. Either way I win.

Thanks to COBR, today turned out to be the one of the strongest days of the year, as my portfolio gained more than $9,000 to finish at $507,032, up $14,824 for the week, and up 11.3 percent for the month of July, handily outperforming the NASDAQ and the S&P 500 (which marks the 12th consecutive month that I've outperformed the S&P). However, as one reader mentioned to me in an email, regression to the mean is a fact of life in financial markets. Though the my portfolio continues to perform very well, I still believe that luck has as much to do with it as skill (in fact, probably more so). Thus, I doubt that my winning streak against the S&P 500 will last much longer. Have a great weekend everyone!

Great blog! I also own COBR and wrote about their conference call over at my site. Looks like we share a couple other holdings - OUTL and PATK. Good luck!
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