May 6th, 2008

Nuggets among 2007 IPO’s: KGS, COV, VISN, PMC

If you’re like me, you read as many blogs as possible, hear as many divergent opinions as you can and then make your own decision. Today, I’m amazed by the number who’ve commented about the “Sell in May ….” philosophy, everyone from yours truly (appropriately on May 1) to Mark Hulbert of Marketwatch, NYTimes and Hulbert Financial Report. I’m equally surprised by the number who see the market catching its breath after its nearly 10% sprint from the March low of 1276.60 to Friday’s close of 1399.34.

It’s at times like this that I like to step back from the tumult and try to get my bearings. One way I do this is read diverse sayings from assorted people who are generally recognized as being savvy traders and investors. Their pearls of wisdom help me keep my bearings, take a pause and prevent me from getting off my course. And a good place to go is a site called Trading Quotes. I have a link in my linkfarm of “Blogs I Read” to the right.

Here are a couple that seem to me to be appropriate in the current environment:

“When you are confused, it is best to do nothing. You are just going for a random walk and that is when you are liable to get mugged, because you don’t have staying power. You are likely to be faked out by some stray fluctuations because you lack the courage of your convictions. As my friend, Victor Niederhoffer says, the market destroys the weak – that is, investors who don’t have well founded convictions. You need some convictions to avoid getting faked out, but having the courage of your convictions could get you wiped out if your convictions are false. So, I prefer to take a stand only when I have well-founded convictions.”-George Soros

and

“The biggest things that keep a trader from meeting their plans are: getting sloppy a few times, forgetting to place a stop, or getting stubborn on one trade. These are the things I see. One mistake waiting to bite you in the rear.”-Linda Bradford Rashke

or

“The single most important advice I can give anybody is : Learn from your mistakes. That is the only way to become a successful trader.”-David Ryan

and, finally,

“While enthusiasm may be necessary for great accomplishment elsewhere, in Wall Street, it almost invariably leads to disaster.”-Benjamin Graham

Having said that, there are several stocks I’m excited about now. Specifically, it looks like the stocks that were winners last year and the beginning of this continue to be the stocks with momentum, stocks that continue to forge ahead to new highs. I mentioned several of them before (see April 28). Unfortunately, many of them are too far away from a suitable entry point but for the venturesome, there’s probably still run for them to run.

I look every day at the new high lists (12-mos and 4-year and all-time) but, so far, it still the same old (oil & gas, steel, coal, materials) names. An furtile area to scavenge for possible new winners is the list of and 2007 IPO’s. Among them are a few stocks that are recovering from their post-IPO fall and are about to move into new all-time high territory. Among these are click on symbol for chart):

  • KGS (Quicksilver Gas)
  • COV (Covidien)- best of the lot
  • VISN (VisionChina Media)
  • PMC (Pharmerica)
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