A random thought on market timing…

As much as I don’t want to admit it, it sometimes takes me learning the same mistake a few times before I change my behaviour.

I was watching a company for the better part of 6 months. I figured that at under 0.50 is was OK to purchase based on the value of the assets alone. NCAV was around 0.60. Even better, the company was part of a sector that is recovering strongly from the economic slump of the last 3 years. ROC and revenue was trending nice sequentially. And above all the company is headquarted here in Edmonton. Since the Q3 2011 there was ample time to build a position. There was really no excuse on this one.

Why did I miss it? I have had a tougher time than normal finding companies to invest in. Some of my picks are hitting their fair value and I don’t have anything to replace them with. So I either take more risk or hold cash while I research looking for a potential opportunity.

I was thinking this is a sign of market top as valuations have become stretched at best. What does it mean? Likely poor future returns if you invest in a broad version of the market. I DON’T!! I invest in little obscure companies. They have their own catalysts regardless of the market as a whole. This is the reason I actually have a chance to outperform a team of professionals who have access to more information and, more importantly, more time than I do to pour into analyzing companies.

The company is HYD.to. It is up like 30% today. I will be checking my numbers again. This is a rookie mistake and I am embarrassed that I did it. I feel blogging about it will help me from doing it again in the future. I’ll keep you updated if I buy any HYD.

Dean

Disclosure: The author is NOT long HYD.to, but wishes he was.

4 Comments

Filed under Random Thoughts

4 responses to “A random thought on market timing…

  1. Pingback: A random thought on market timing… - Petty Cash - The B-Hive - Waggle

  2. Michael

    You can still pick it up. Still cheap at the low 0.60 cent level.

  3. Michael Doumet

    What do you think needs to happen here for us to see HYD climb to higher valuations? And is that possible/likely? Thanks.

    • I wish I knew. If I had to guess I would think that there is general fear that the cycle has peaked for the oil and gas service stocks. There is “soft” news from China and the entire sector is cheap.

      I think if HYD has a few quarters of meaningful earnings you will see the share price move higher. I am speculating that the market is worried this is a one time phenomenon.

      Just my opinion though. Prices are tempting here.

      Dean

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