Wednesday, August 14, 2013

When Fads Go Bad and My Own Fish Story

Mike Santoli's discussion of fad companies/stocks peaked my interest. This was because I am reminded of my fish that got away story. A few years back, I was had planned to short Crocs, via a purchase of long-term puts. My screening working and analysis indicated the company's margins were unsustainable, as inventory levels were bloated, as DSI's expanded, and the market was becoming saturated. This was when the shares were trading around $70 a share. The ink on the option account paper work was not even dry yet when the company reported lousy numbers and the stock tanked. I put the idea away and watched the shares ride all the way day to below $10 per share.  Oh well, there is always another trade. 

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