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Novation Companies, Inc. Message Board

  • cervalces cervalces Aug 2, 2003 2:28 PM Flag

    400% Club - Friday Bath - PED

    Everyone who follows this board already knows this, but just for completeness...

    Started the year with an investment.

    In just over six months, due to FBR, HLSH, IMH, and NFI, it became 200% of its original self.

    Put that 200% into NFI. Margined it and, by the close of business Thursday, ended up with 400% of my original investment in NFI.

    Friday, NFI dropped 8%. This translates into 32% of my original investment.

    One quarter ago, the pre-ex-dividend (PED) drop was almost 9%. The stock price lavished around that bottom for about 4 weeks, from 24 April through 20 May, up less than $2 out of $42.39. Then, all but pennies of the pre-ex-dividend loss was recovered in the next 2 days.

    The next 2 days!

    No problem. I wire the margin call devil enough gold for the dance, and some extra for more purchases - can't pass up these prices. I wait one-to-five weeks and, ho hum, off we go again.

    I never dreamed last quarter's PED would repeat or I would have been ready with a bigger and faster truck to load up.

    Anyone have an analysis of NFI's PED phenomenon? I believe in coincidences, but...

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    • Gotta love the Navy. I took a celestial navigation course with the NROTC (not a member, one of my students talked me into it). Unfortunately I had a hard time equating the class lecture which described CN from the deck of a destroyer to that of my little 22' Catalina. Still have the books though.
      Florida is fine with me for the party.

    • bj, thanks for your kind and mature remarks. Indeed I am not bashing, it's just that those who are carried away, they subjectively and unreasonably interpret it such. You learn nothing if you don't listen.

      Anyway, there seem to be about 4 of us in Florida, unfortunatly slightly sprinkled about the state.

      If things should work out the drty way - which would be nice - maybe we should have a Florida party ? My place is in Delray Beach which is next North of Boca Raton. Picked the Atlantic coast after finally finding US Navy maps like "Surface Water Temperatures in January" etc (around Florida) , they resolved the passionately held opinions about the East and West Coasts.

      Walter

    • Walter:
      No one regardless of who they are or how smart they are should criticize you for wanting to protect your investment. Given your investment time frame, if you feel uncomfortable with a stock, you should use your own judgment in selling it.
      Unlike some on the board, I have not seen you bashing the stock, but rather simply asking questions which you needed answered.
      Whatever you choose to do, good luck.

    • That was and still is my plan to sell the shares I bought Fri. Bought at $64.25. May lower my sell from $67.00 to maybe as low as original buy price, thereby at least capturing the divi. Pardon my temporary brain cramp thinking about selling higher priced shares.

    • >>>>wapiti126: <little gray stuff circling that little chrome-dome>

      Hey, that's an insult. Hair on men is to cover up mistakes<<<<<

      insult? I'm sorry. I thought you claimed to be a little thicker-skinned than that.

      Hair, cover up mistakes? ah! so that's probably why the batch of fine folicles that produce this gorgeous 'do', resembling that of a greek god, got placed on my ugly grape........:^o)..........now I understand.

    • Was the pre-ex-dividend PED day also on the day after the Conference Call last quarter ?

      I had not heard of NFI then and no one seems to tie that in: Was the drop on Friday because

      - The CEO on the CC sounded subdued this time. Presumably more upbeat a Q ago ?
      - Funds got flustered by the CPA flap
      - Friday was the Pre-Ex-Dividend Day, but also the post-CC day
      - because it was Friday

      Walter

    • Sorry, the last message went out before it was finished or proofed. What lessons can one draw from the past week?

      1) The "PED" phenomenon: I referred to this in a number of posts, and commented that my strategy of adding as the stock went down last April 25 was the wrong one. I should have sold everything quickly and rebought once the slide was over. I partially followed that strategy this time, but I forgot about 2000 shares I had waited on before seeing that the slide was real.

      The economics of this stock make it vulnerable to liquidation before x-div day. If you can sell and avoid high taxes on the income you receive on the dividend (you take the capital gain and apply against accumulated capital loss), why not do it? My commission cost with Fidelity was .045% with a two way transaction, and half that with Scottrade. It's really negligable.

      2) The stock has shown a weakness pattern over the past two weeks, more prone to downdrafts than updrafts. The buy and hold strategy that worked fine when it was only going up doesn't work so well when it goes down. The parabolic price curve Thursday morning was a trader's dream (unfortunately, I got back to my desk when the parabola bottomed out after 15 minutes; amazing how much you can lose in 15 minutes with this stock!).

      3) Another lesson is that it doesn't pay to be religiously wedded to a stock under all circumstances. I took the hold strategy (like Herbert Hoover's "prosperity is just around the corner") in 2000, and now I have a big hole to fill with my capital losses. In one thing the short sellers are correct -- people tend to be blindsighted by their own economic interests. If you are heavily into a stock, the idea of selling it tells you that your strategy was wrong. Psychologists have shown that people are very unprone to sell off their declining investments.

      4) Think about the implications of the August 1 poll: everyone was over, sometimes way over. While I think this is still a good company, its armor shines a bit less brightly than it did on the way to 75, and it has been shown again to be vulnerable to perceptions of swings in the overall real estate and mortgage markets. They couldn't offer heroic results this time, but they could offer reasonably decent ones. That didn't do it this time around

      • 1 Reply to hackerpx
      • This is tied to the rate situation. Interestingly, I spoke with a Real estate professional and this person told me that the current rate hike is "made up" by the banks.
        The problem today is that there are not enough appraisers to do the workload and banks are way behind. That affect the rate lock-in time and creates problems.. Too much demand and not enough supply. Thus to slow the new applications and catch up on the back log, there is nothing better than a 1/2% rate hike.
        My view and his view is that this a temporary artificial phenomenon until the backloged applications get to a reasonable level. The economy does not warrant for such a hike.
        Bottom line is that this stock is not out yet and it will be proven over the next couple of weeks or next month.

    • I referred to this in two posts, noting that my mistake last April was to keep adding as the stock went down and not t osell at the outset. This time I changed my stragegy, although I was so caught up in watch

    • chief say only war paint on upper body for war dance

    • Just got back on--Of course I was talkin toyouseetcheekswhoinhellelsewouldIbetalkintointhatdarkcorner

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