by Travis Johnson, Stock Gumshoe | January 20, 2016 11:14 am
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Source URL: https://www.stockgumshoe.com/2016/01/a-couple-more-stop-losses-and-one-buy/
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Travis:
I also bought into MPW recently (and am therefore nowhere close to my stop loss yet) but I clearly noticed the outlandish drop today during the regular session. Since I also knew about the planned secondary in DOC (the reason I waited before buying it and bought MPW instead), my guess is that with almost no buyers in the markets here in 2016, then the buyers of the secondary for DOC probably liquidated some of their MPW positions to do so and keep their REIT allocations stable. I think this is an example of when relying rigidly on stop losses does not make sense. If you know or strongly suspect a specific temporary reason for a stock drop, then its worth it most of the time to give the position a few more days.
The after hours in REIT’s are not often reliable, since the volume is not significant, but MPW traded all the way back to 10.59 in the session. I certainly it opens and stays at that level tomorrow. And I hope you decided to wait until tomorrow before selling. The closing price of 10.08 was probably below your stop.
This was a very depressing day for me since I decided I needed more dry powder to use for portfolio insurance if the slide continued another 2 or 3% (my line in the sand before buying protection). My put option positions covered by cash do not have nearly low enough strike prices, or long enough expirations, and I had a large number of covered call options expire on Friday that I done nothing with. So I sold a lot of winners along with losers today to move to 20% cash, and of course my decision was what reversed the market back up at 12:30pm.
I don’t plan to read anything on your website or anyone else until the dust settles this weekend and I re-evaluate the 2016 market prospects.
Probably very wise — “don’t just do something, stand there” tends to be good advice in a panic.
Any update on ATUSF? Its really hurting.
It’s going down because all commodities are going down, and because of fear that their coal portfolio will lose value with Alberta’s coal power moratorium moving up (to 2025 from 2035, if memory serves). If all commodities remain low or fall further for the next several years, Altius will not be terribly fun — but they should have no balance sheet issues and should ride it out until commodity prices recover (assuming that they do recover, which is certainly not guaranteed). That’s my general thesis on Altius, and the reason I’ve not use a stop loss on these shares personally — though it has certainly been ugly of late.