Tuesday, November 13, 2012

Taking a Ride on Trinity

The portfolio added to its position in Trinity this week. Overall, the position provides the portfolio some exposure to the transportation space. More specific rational for investing in this stock can be found in the article below.
The above article focuses on the "facts and numbers" about the stock. Another key part of investing/trading is the psychological aspects of the investor. Learning to successfully managing the feelings of fear and greed are critical to investing success. With my new found blogging activity, it seemed this would make a good case study in not only in stock analysis but human nature's impact on investing.
So...I decided to augment this analysis with my wild ride with the stock.......(in other words, please indulge me a short catharsis).
  • When driving across the midwest the past few summers I saw an increasing amount of windmills. I thought this might be an investment opportunity. I did some research and came across Trinity as a supplier of wind mills.....although they have other larger businesses.
  • I did some research and when the stock pulled back from its high around $45, I bought some Trinity stock at $32.14. Of course that was September of 2008. Yes, that is right, immediately before the financial panic. The stock proceeded to sink like a rock, going well below $10 in the spring of 2009. What an idiot!
  • It fairly quickly bounced off of those lows, only to be seemingly stuck in the teens. Like many investors, I seemed to be too stunned to act.
  • After sitting on this loosing position for 3 quarters, I did evaluate the position to see if it was a good candidate to harvest as a short-term tax loss. (FYI, that is my standard process. If a position has not performed as anticipated after 2-3 quarters, I force myself to try to do a fresh analysis and most likely harvest loses.) In this case, after some analysis, I decided not to use this position for tax loss harvesting and hung on to it. It was trading under book value.
  • Holding on was "the right" choice because the stock continued to rebound. In fact, Trinity recently zoomed past the “critical, all important” (not really) break even point in my portfolio. Human nature tugged at me to sell, and breath a sigh of relief. After all it is up about 400% from the bottom!
  • Before giving into this urge and selling, I decided to wait for another quarter's earnings results and refresh my research. That research went into the article referenced above. Based on that research, instead of selling I decided to double down as the analysis indicates a good possibility of the stock going back to $45.
Who knows how this will work out.... Hopefully it will be an example of controlling emotions leading to a profit. .....or not.

In any event, I thought augmenting the factual analysis with some psychological perspectives might be worthwhile......or not.

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