Tuesday, June 29, 2010

Bookkeeping: Closing Atheros Communications (ATHR)

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I've written about this name a few times lately, as recently as last week [Jun 24, 2010: Atheros Communicatins Bewilders Me] and while someone with a 3 year horizon should make good dinero buying the name here, I have a shorter term time frame and will be closing the last 0.4% exposure with a 26% loss.  If you are a long time reader you will realize I never take 26% losses because I don't average down and in fact when a stock begins to break support I either cull or leave entirely.  I did make an exception in this case (with a very small exposure).  Many stocks I held with similar chart formations to Atheros Communications (ATHR) I dumped in May as they broke support, with losses of 4-8%.  I decided to hold onto (while cutting it back) this name for fundamental reasons, and you can see the degree of loss difference.  Sometimes those names that I cut reversed back up and my sales looked foolish but off the top of my head only 2 names (SWKS, RVBD) rallied with any vigor from where I sold them in May so I consider the odds on my side as many other names went on to far bigger losses. 

I say this to highlight why technical analysis is such an important part of my strategy... it marks the difference between a 6% loss and a 24% loss. And why "averaging down" is another thing I rarely do.


I am sure I will be back in this name at some point in the future, and frankly at a  higher price.  But it needs to get back into good technical standing - which is now a long ways away.

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