These are 2 of my favorite names, but both now have violated the 200 day moving average (closing below this key technical level). So I am going to simply cut back these positions as both are up 2-4% this AM, and wait for better days. I'd rather buy some relative strength, meaning I'd be willing to buy these names at higher prices when they start reacting better. Otherwise stocks can continue into downward trend indefinitely and what looks cheap today can remain cheap for a long time (dead money at best, losing position at worst) Apple (AAPL) and Google (GOOG) are clear examples of this; once they broke their 200 day moving average they simply weakened and at best make sideways moves. Doesn't mean the fundamental story changed; just investors appetite for these names.
This is where my strategy differs 100% from "patient value investors" - who have been gobbling up these names, and keep averaging down and waiting, and waiting, and waiting. #1 you need to have endless pockets of money to do this strategy because each stair step down in price you buy the stock even cheaper and #2 you have a lot of opportunity cost wasted - while you are sitting in dead stocks, other stocks are performing so you give up that gain. The value guy arguement is "I am getting a great price". I don't disagree, but who knows when the reward will come. There have been people buying homebuilder stocks as "great values" for 2 years now. So I'd rather buy at a higher price when the market is ready to reward these companies for their intrinsic value. That could be tomorrow, 2 weeks, 2 months, 2 quarters, or 2 years from now. I'll let the market dictate that timing.
I sold down 175 of 275 shares of infrastructure name McDermott (MDR) near $45; this reduces this 1.1% position by 60%.
I sold down 200 of 400 shares of solar stock Suntech Power (STP) near mid $47s; this reduces this 1.6% by 50%
These were both positions I made a good amount on in the fall, but have given back a ton of gains, especially in Suntech Power. Both also have earnings upcoming which is another risk (or opportunity depending on how you look at it).
Long McDermott and Suntech Power in fund; no personal positions
