DUCK lost money both in its most recent quarter and over the past 12 months, so I sold it. I wish I’d been smarter about the way I sold it. I hadn’t decided which new stocks to buy yet, so instead of just selling DUCK and sitting in cash, I thought I’d using a trailing-stop order. With a regular stop, you tell your broker to sell the stock once the price drops below a certain point. If the current price is $23.50 and you set a stop at $23.00, then when the price drops below $23, the broker sends the order to the market and fills it. It’s a way to automatically limit your losses (or protect a certain amount of gains) in a stock. A trailing stop works the same way, except that the stop-price moves up whenever the current-price moves up. You set a trailing-stop at 50 cents below market. If the current price is $23.50, your stop is at $23.00. If the current price goes to $24, then your stop moves up with it to $23.50. I figured this would be perfect for my situation. I knew I wanted to sell DUCK. I didn’t know what I wanted to buy next. If DUCK went up in this period of time, I’d benefit. If DUCK went down, I’d lose very little.
Or so I thought. The stocks that I own are thinly traded - they’re small and unknown. You always want to use limit orders for these type of stocks. But all stop-loss orders are really market orders. The broker holds onto them until the price hits the stop and then sends the order to the market as a market-order. So, in my case, DUCK closed at 23.49 on the day before my order. I placed a trailing-stop at 50 cents. DUCK opened at 21.50. The trailing-stop triggered and my order filled at 21.60. The stock price then jumped back to 23.50 and remained there. I got screwed! The real problem is that I got greedy. Instead of hoping for a few extra pennies per share, I should have just set a limit order at $23.00 and forgotten about it. Live and learn. Either I want a stock in my portfolio or I don’t. Squeezing extra pennies out of it is not the way to get rich.
| Sold Stocks | Purchase Date | Total Return | Reason for sell |
|---|---|---|---|
| Duckwall-ALCO Stores ([DUCK](http://finance.yahoo.com/q?s=DUCK)) | 2/1/2005 | 14.25% | Quarterly loss on top of TTM loss |
Here’s how the rest of my portfolio is doing as of 11/30/05
| Current Holdings | Purchase Date | Total Return (so far) |
|---|---|---|
| Deswell Industries ([DSWL](http://finance.yahoo.com/q?s=DSWL)) | 9/20/2004 | 7.52% |
| Patrick Industries ([PATK](http://finance.yahoo.com/q?s=PATK)) | 2/1/2005 | 6.14% |
| Outlook Group ([OUTL](http://finance.yahoo.com/q?s=OUTL)) | 2/1/2005 | 79.51% |
| All American Semiconductor ([SEMI](http://finance.yahoo.com/q?s=SEMI)) | 2/1/2005 | -25.48% |
| Cobra Electronics ([COBR](http://finance.yahoo.com/q?s=COBR)) | 2/1/2005 | 43.24% |
| StarTek Inc.([SRT](http://finance.yahoo.com/q?s=SRT)) | 8/2/2005 | 20.10% |
| Blair Corp. ([BL](http://finance.yahoo.com/q?s=BL)) | 8/4/2005 | -6.51% |
| Communication Systems Inc. ([JCS](http://finance.yahoo.com/q?s=JCS)) | 8/4/2005 | 10.65% |
| Kimball International Inc. ([KBALB](http://finance.yahoo.com/q?s=KBALB)) | 11/8/2005 | -1.82% |
| McRae Industries ([MRI-A](http://finance.yahoo.com/q?s=MRI-A)) | 11/8/2005 | 0.53% |
| Champion Industries ([CHMP](http://finance.yahoo.com/q?s=CHMP)) | 11/16/2005 | -1.17% |