I used to make a living as a Hedge Fund trader. Mind you, not a great living as I was hardly the Pedro Martinez of event driven trading. But I held my own. Think Paul Byrd without the funky delivery.
And I held my own because I understood there is a difference between being disciplined and being a punk. For the laymen out there, here is the difference. Punks blow out their positions the moment their positions start leaking. Forget patience. Forget fortitude. The Punk cuts his losses at the first hint of blood and this often gets in the way of opportunity. Conversely, the disciplined trader has a higher threshold for pain. And if he has conviction, he may stick with a trade even if the opening rounds go against him. In practice, I fell somewhere in between.
But this morning, I am adhering to my conviction and practicing discipline. That means I am not selling my Red Sox stock into this panic and instead, I am out there buying. And let’s be clear, this stock is getting pummeled right now, particularly on the heels of this bullshit research report titled: “No Team in History has won the World Series after Starting 0-4.” It is embarrassing what is passed off as research these days.
Predictably, this report is scaring the piss out of the retail RS investor and now I am seeing naked short sellers from all over the country banging this stock down. Obviously, you got the NY guys shorting this name but institutional guys like John Kruk are also selling. Buster Olney is paring. Rick Manning of the Indian Broadcasting Team placed a sell order last night. And even some Baltimore Day Traders are now jumping in. Mind you, RS opened last Thursday morning at 96 (wins). Five days and four losses later …. some dipshits were selling it at 88 this morning.
Lesson number two from my past … the herd is almost never right. And if the herd is puking, it is time to buy. Just as it was wise to scoop up Miami Heat stock a few weeks back as shorts were pounding the “crying in the locker” story, it makes plenty of sense to add more “red sox” today.
I say that even though I admit last night’s loss was a shot to the testicles. The loss was bad enough but what bothered me most is the appearance that the team is already a bit freaked out. Accordingly, it looked like guys are squeezing the life out of their bats. And Beckett, a guy who should be able to handle a little pressure, seemed more afraid last night of making a big mistake than getting back into the dugout.
I think I would be a bit more worried about all this if the collective resume of this group wasn’t dripping in grit. I mean this roster is struggling right now but there are guys on the 25-man who have been through wars and have met high expectations. Granted, expectations right now are at super-high levels but that doesn’t mean guys like Pedroia and Youkilis, Ortiz and Crawford will automatically turn into punks and shrink from their duties.
So while others are puking stock, I am leaning on my discipline. And because my level of confidence remains high, I am using this selloff as an opportunity to pick up some stock on the cheap. Mind you, I am keeping some powder dry as I don’t want to get crazy ahead of a Matsuzaka start, but if he blows up, I will be back at it tomorrow, averaging down. For the record, it is going to take a lot more than a little market noise to shake me out of this stock.
Summing up, if I liked it at 96 … then I got to love it at 88, right?