DUCK lost money both in its most recent quarter and over the past 12 months, so I sold it. I wish I’d been smarter about the way I sold it. I hadn’t decided which new stocks to buy yet, so instead of just selling DUCK and sitting in cash, I thought I’d using a trailing-stop order. With a regular stop, you tell your broker to sell the stock once the price drops below a certain point. If the current price is $23.50 and you set a stop at $23.00, then when the price drops below $23, the broker sends the order to the market and fills it. It’s a way to automatically limit your losses (or protect a certain amount of gains) in a stock. A trailing stop works the same way, except that the stop-price moves up whenever the current-price moves up. You set a trailing-stop at 50 cents below market. If the current price is $23.50, your stop is at $23.00. If the current price goes to $24, then your stop moves up with it to $23.50. I figured this would be perfect for my situation. I knew I wanted to sell DUCK. I didn’t know what I wanted to buy next. If DUCK went up in this period of time, I’d benefit. If DUCK went down, I’d lose very little.
Or so I thought. The stocks that I own are thinly traded - they’re small and unknown. You always want to use limit orders for these type of stocks. But all stop-loss orders are really market orders. The broker holds onto them until the price hits the stop and then sends the order to the market as a market-order. So, in my case, DUCK closed at 23.49 on the day before my order. I placed a trailing-stop at 50 cents. DUCK opened at 21.50. The trailing-stop triggered and my order filled at 21.60. The stock price then jumped back to 23.50 and remained there. I got screwed! The real problem is that I got greedy. Instead of hoping for a few extra pennies per share, I should have just set a limit order at $23.00 and forgotten about it. Live and learn. Either I want a stock in my portfolio or I don’t. Squeezing extra pennies out of it is not the way to get rich.
|Sold Stocks||Purchase Date||Total Return||Reason for sell|
|Duckwall-ALCO Stores ([DUCK](http://finance.yahoo.com/q?s=DUCK))||2/1/2005||14.25%||Quarterly loss on top of TTM loss|
Here’s how the rest of my portfolio is doing as of 11/30/05
|Current Holdings||Purchase Date||Total Return (so far)|
|Deswell Industries ([DSWL](http://finance.yahoo.com/q?s=DSWL))||9/20/2004||7.52%|
|Patrick Industries ([PATK](http://finance.yahoo.com/q?s=PATK))||2/1/2005||6.14%|
|Outlook Group ([OUTL](http://finance.yahoo.com/q?s=OUTL))||2/1/2005||79.51%|
|All American Semiconductor ([SEMI](http://finance.yahoo.com/q?s=SEMI))||2/1/2005||-25.48%|
|Cobra Electronics ([COBR](http://finance.yahoo.com/q?s=COBR))||2/1/2005||43.24%|
|Blair Corp. ([BL](http://finance.yahoo.com/q?s=BL))||8/4/2005||-6.51%|
|Communication Systems Inc. ([JCS](http://finance.yahoo.com/q?s=JCS))||8/4/2005||10.65%|
|Kimball International Inc. ([KBALB](http://finance.yahoo.com/q?s=KBALB))||11/8/2005||-1.82%|
|McRae Industries ([MRI-A](http://finance.yahoo.com/q?s=MRI-A))||11/8/2005||0.53%|
|Champion Industries ([CHMP](http://finance.yahoo.com/q?s=CHMP))||11/16/2005||-1.17%|