I'm Not A Trader, But This Market Is Making Me Act Like One

Market volatility has killed my investing discipline. Or at least it feels like it.

Over the past two choppy down market weeks, I've sold five stocks - ACH, RMA, UA, LULU, and TNH - all due to their falling a third from their highs. Three of those stocks were owned for less than 2 months. All five of them had been owned for less than 8 months.

The last thing I want to be is a hyperactive trader who gives up on long-term stories due to short-term fluctuations. If that happens, then the damage done by implementing the supposed "lessons learned" from The Stock We Don't Speak Of will become catastrophic.

The above stocks have been replaced by Dominion Resources Black Warrior Trust (DOM), a 12% dividend yielder, and let's face it, just a cool name; Tidewater (TDW), a very cheap oil rig services play; and MEMC Electronic Materials (WFR), my late entry into the white-hot solar energy sector.

Truthfully, I have very little confidence in these stocks, or any other stocks in my portfolio. I have sell orders just waiting to be triggered if my stocks fall further. But I'm staying in the market because I could be wrong. It's the prudent thing to do...at least that's what I keep telling myself.

Stock Of The Month: NVDA

Back in July 2006, when AMD merged with ATI to get into the graphics chip market, Nvidia (NVDA) rallied from (a split-adjusted) $12 to $15 on speculation that it too would be taken over, most likely by AMD's much larger competitor. I immediately thought, "I've missed the move".

A year and a half later, NVDA sits at $36, still an independent company. By thinking I had missed the move, I ended up missing the real move.

Better late than never, I picked up some shares this week at $35. I believe NVDA is a great way to play the booming PC market; everybody mentions Intel, Microsoft, HP, and Dell, but seems to forget Nvidia - even though they dominate the graphics chip market - and that for today's PC users, graphical power is more important than computational power. These users demand Nvidia's superior products. Longer-term, Nvidia's technology promises to be critical to the gaming console and home theater entertaiment segments (their chip is already in use in the PS3, which, while lacking the software, is undeniably the most advanced gaming system platform out today).

While it is risky to buy a stock that has run like NDVA has, it still has reasonable valuations, a great balance sheet, and is just a $20 billion dollar company...perhaps Intel will buy it yet.