Thursday, 25 September 2014

Breaking my rules

I know I said I would follow my rules and had set my exit point in BBRY to be $10 a share. But I will be breaking it at this point. The Earnings Report is tomorrow and due to the market sentiment on Blackberry out there, there have been two analysts who downgraded their rating. I feel that the drop in price is partially due to the downgrade that people seem to refuse to read or think about carefully. Another part are people hedging their positions on the short side if the ER is bad. And a third part is that the market as a whole was down today. So due to the many contributing factors based on empty news, the price of BBRY dropped just a bit below my $10 exit point.

I decided that since my analysis said that the price will go up after this ER, which information tells me will be a positive one, that I will wait until the ER tomorrow at 8:00 am before taking any set action. Because if the ER is negative like people shorting the stock think, it will be better for me to switch sides and jump onto the short side to make a profit.

I have a feeling that I will be learning a valuable lesson here. I get the feeling that people only read part of what happens and then act without understanding the action fully. In my eyes, if an analyst had given a stock a Buy rating when it was trading at $8-9 a share and has a price target of $11.50 and then changes it to Market Perform when it's trading close to $11 a share, it simply means that the stock is performing as the analyst thinks it should. Unfortunately, people tend to be lazy when reading and react only to the word "downgrade" and sell their position too early. I can't really blame them based on Blackberry's past performance. But doing it this close to the earnings report I think is folly. But I guess I'll see tomorrow how things stand with the company.

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