I've shaken up my portfolio considerably in the past three weeks. I've sold Infosys (INFY) at a 18% gain; NYSE Euronext (NYX) at a 22% loss (and right before the massive Borse Dubai/Nasdaq/OMX/LSE deal...oops), and Fuel-Tech (FTEK) at a 73% gain. FTEK was the toughest of the sells since its in a great business (making coal cleaner through emission controls), but it had fallen 40% from its high and I couldn't let it slip further.
On the buy side, say hello to RMK Advantage Income Fund (RMA) and its fat 16% dividend; Apple (AAPL), which has fantastic prospects for its PC business and international growth; and Terra Nitrogen (TNH), which is in the very bullish agriculture sector and pays a nice, albeit lumpy, dividend to boot. Consider all three "Stocks Of The Month" for September.
And then, there is Delphi (DPHIQ.PK). I recently reached the conclusion that since I had no problem catching this falling-knife of a stock - repeatedly - that I might want to figure out the actual value of the pre-bankruptcy exit stock. That number, according to my calculations, is $0.69. Therefore I'm going to try to DCA my way below that. If only I could have followed my own "sell after the stock falls a third from its high" advice, I would have been out at $2.61.
Two dollars and sixty one cents.
And then I could have taken that money and bought back Delphi at its much lower current price.
Lesson learned: the "third" rule exists for a purpose, and it probably shouldn't ever be broken.
