{"id":26247,"date":"2011-12-28T09:52:41","date_gmt":"2011-12-28T14:52:41","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/12\/28\/my-best-and-worst-trades-of-2011\/"},"modified":"2011-12-28T09:52:41","modified_gmt":"2011-12-28T14:52:41","slug":"my-best-and-worst-trades-of-2011","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/12\/28\/my-best-and-worst-trades-of-2011\/","title":{"rendered":"My Best and Worst Trades of 2011"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

\"\"<\/a>For all of the gut-wrenching volatility, 2011 was actually a pretty good year if you managed to avoid financials and materials stocks.\u00a0 Defensive stocks\u2014particularly those that pay dividends\u2014actually did quite well.<\/p>\n

My best pick of the year, ironically, was a financial stock\u2014credit-card giant Visa (NYSE: $<\/span>V<\/a>),<\/strong> the winner of InvestorPlace\u2019s \u201c10 Stocks for 2011<\/a>\u201d contest.\u00a0 At time of writing, Visa was up a full 46 percent for the year, not including dividends.\u00a0 (To see my follow-up pick for 2012, see \u201c10 Stocks for 2012<\/a>\u201d).<\/strong><\/em><\/p>\n

In Visa, I saw a company supported by powerful macro trends\u2014the shift to a global cashless economy and the rise of the emerging market consumer\u2014whose stock price was temporarily depressed due to regulatory fears.\u00a0 When the heavy hand of government proved to be a little less heavy, Visa exploded to the upside and has yet to slow down.<\/p>\n

If only they could all<\/em> be that way\u2026<\/p>\n

We now come to my biggest failure of 2011: Research in Motion (Nasdaq: $<\/span>RIMM<\/a>).<\/strong><\/p>\n

RIMM is down 51 percent from my recommendation price at time of writing.\u00a0 When I originally recommended this stock, I knew the company had \u201cissues.\u201d\u00a0 You don\u2019t find companies as cheap as RIMM that don\u2019t have at least a little something wrong with them.\u00a0 Still, I thought\u2014and still think\u2014that the bearishness was ridiculously overdone.<\/p>\n

I dedicated a fair bit of the last issue of the Sizemore Investment Letter<\/em> to illustrating how ridiculously cheap RIMM was, and yet the stock has gotten significantly cheaper in just the past three weeks.\u00a0 In the latest of a long string of disappointments, management announced that its new line of phones would not be out until late 2012 instead of the first quarter and cited the availability of key component parts as the reason for the delay.<\/p>\n

Normally, I would understand how an announcement like that would send the share price down 11 percent in one day.\u00a0 But given that the company trades for just 4 times already-revised-downward earnings and trades for 0.33 times sales and 0.68 times book value, it\u2019s shocking that bad news still has any effect.\u00a0 At current prices, RIMM could be cut up and sold for spare parts at a profit.\u00a0 It really defies comprehension given that the company\u2019s subscriber base continues to grow (now up to 75 million).<\/p>\n

I continue to believe that RIMM has a bright future as a services company regardless of what happens with its handsets.\u00a0 And I haven\u2019t given up on its handsets either.\u00a0 Even a mild improvement in the company\u2019s fortunes could translate into a 200 percent gain or more. \u00a0\u00a0But in 2011, none of this mattered.\u00a0 RIMM was a classic value trap\u2026and I walked right into it.<\/p>\n

If I am to learn a lesson from this misadventure, it is that a cheap stock can always get cheaper\u2014and that it pays to cut your losses early.<\/p>\n

If you liked this article by Sizemore Insights<\/em>, you\u2019d probably enjoy The Sizemore Investment Letter<\/em>, our premium members-only newsletter. Click here<\/a><\/strong> for more information.<\/p>\n","protected":false},"excerpt":{"rendered":"

By The Sizemore Letter For all of the gut-wrenching volatility, 2011 was actually a pretty good year if you managed to avoid financials and materials stocks.\u00a0 Defensive stocks\u2014particularly those that pay dividends\u2014actually did quite well. My best pick of the year, ironically, was a financial stock\u2014credit-card giant Visa (NYSE: $V), the winner of InvestorPlace\u2019s \u201c10 … <\/p>\n

Continue reading “My Best and Worst Trades of 2011”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-26247","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/26247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=26247"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/26247\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=26247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=26247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=26247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}