Monday, November 27, 2006

batting single A

Well with SanDisk (SNDK) taking almost a 5% hit today it is hard to think my picking it anything but a mistake. Of course if it had GAINED 5% today, instead, I would be thinking, “… I knew it, never had a doubt.” And there in lies the rub. Today was a little confusing to watch. The CEO had nice things to say about the company this past weekend. Then boom! Red numbers today that trickled lower as the day wore on.
Perhaps I should start back a bit.

I poked at Sandisk (SNDK) at the end of Oct. (10-30-06). Pushed the chips in at $48.20 and knew almost immediately that it was going against me. Looked at the numbers again (P/E, sales, cash flow, the usual suspects) and still thought the company worth my dollars. Instead of selling out I wrote Nov. 50’s covered call options at $1.25 that same day. I then spent the next few weeks watching it drift downward. November expiration came and went and I still had the stock all be it underwater. Not ready to call it a mistake I wrote the Dec. 50’s at $1.35 on 11-20-06. The stock has been treading water in the 47’s most of the time, until today. I wait and watch as the Dec. expiration draws closer. Some days I rationalize the buy and the covered calls were the smart thing and other days (like today) I feel like I stepped on a landmine.

The difference between the “pros” and the others is the ability to take small losses and move on. (Read that somewhere) The way I change my mind on whether this was a good or bad trade and hang on to it in the mean time makes it look like I will be batting single A for awhile longer. Stay tuned I’ll let you know how it all works out. Maybe tomorrow I will tell you about buying Crocs (CROX) on margin and still hanging on to that too.

That’s it for today. Keep your eye on your EveryDay Money

1 comment:

Heath said...

Not being sure what your exact motivation was for picking up Sandisk was, but if you are looking for growth in that sector, you should check out STEC (SimpleTech). The look really good and the stock is way undervalued at this point. Consumer flash memory prices continue to fall, so a company needs to be on to the next best thing. In SimpleTech's case, the future is in solid state harddrives (no mechanical parts). Already used in crucial applications, give it another 1-2 years and it will hit the consumer market as well. Anyway, nice blog, I'll be back.