Be Careful With Dangerous RIMM

Research In Motion(RIMM Quote) shareholders got tossed into a meat grinder last week, after quarterly earnings triggered a massive decline. The stock has dropped more than 20% in the last four trading days, despite end-of-quarter mark-up pressure, and is back to mid-July levels. In other words, it has given up nearly every penny of the summer rally.

This isn't the first time that an earnings report from the tech giant has triggered a violent reaction. In fact, the same thing happened exactly one year ago, when it dropped over 26 points overnight. Ironically, that decline began in the same price zone as last week's swan dive, meaning this issue has shown a zero return in the last 12 months.

Research In Motion (RIMM) -- Monthly eSignal

The company, headquartered in Canada, came public on the U.S. exchanges near $1 (pre-split) in 1999. It lifted to $29 during the tech bubble and dropped down to its IPO price at the end of the 2000 to 2002 bear market. The stock then entered an historic bull advance, rising to $137 in 2007, at the same time the major indices were topping out, ahead of last year's crash.

Nearly all of the multiyear rally gains were posted during a 17-month period between June 2006 and November 2007 (gray box). Realistically, this was the only time in the last decade in which RIMM investors showed superior returns. That's a sad statement, given this issue's inappropriate standing as a market leader and tech juggernaut.