Don't Throw Caution to the Wind With Your IRA

Tough Sale, Tough Hold

Last week, I sold my position in Buckeye Technology (BKI Quote). I had held this stock for seven months, and it no longer appears on my screening system as a buy. This was a difficult decision for me, and I actually delayed selling for a week or two because the only metric that was missing to continue to hold this stock was the six-month relative strength. It never did improve, though, so I didn't force the issue and simply sold it. I would very possibly buy this back if it were to show up on my screen again in the near term.

Whenever I have the misfortune to own a stock that declines 20% or more from my purchase price, I look very hard at that situation, with the preferred course of action being to simply sell the stock and re-evaluate the situation from the perspective of a non-owner.

This is the current situation with Boots & Coots International Well (WEL Quote). I bought this stock in late March at $2.25 and was rewarded immediately with a run up to almost $3.00. In fact, the stock was getting close to a price I consider to be fair value. Subsequently, though, the stock began to decline, and two factors reinforced that decline.

First, the company handled a stock sale poorly by offering the stock at a very substantial discount to prevailing prices at the time. Second, the company announced first-quarter earnings that were apparently disappointing to some investors. While EBITDA was up for the quarter, the company cited delays in customer projects in the Gulf of Mexico and Venezuela for the less-than-hoped-for results. There were some positive comments made regarding expected results for the second and third quarters.