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Readers Tell All
Subject: Lessons Learned, ATCT ATCT has been my dumbest investment over the past 5 years...primarily because it's the first stock I have purchased where I didn't have a real good "feel" for the company when I purchased it. Luckily, it's been a relatively inexpensive lesson for me (about a $2000 paper loss as of today). Here are my mistakes in this stocks, mistakes I will never make again. 1. Getting caught up in the recommendations of the Fool Portfolio. I started following the portfolio in early 1995. Watched on the sidelines as they purchased Medicis which rose very nicely over 6 months. Watched as the purchased COMS and it rose about 70% (before diving this last week). Watched as their total returns hit 150% over 2 years. I set myself up to thinking that "whatever they buy, with few exceptions, turns to gold" The next time they make a recommendation, I'm buying. Lesson #1 -- Never make a stock purchase on blind faith. Nobody's right 100% of the time. 2. When the ATCT "Buy Report" came out, I didn't buy right away. I remember thinking, "Why are they buying this stock? It seems fully valued. But what really bothered me was that there was a 1 time extraordinary revenue stream for Q2 96 that inflated earnings that quarter and accelerated the stock. I wasn't convinced at all that they would repeat that income in Q3, so I waited. Lesson #2: Go with your gut, especially if you have had success in the past doing so. If there's something negative about the stock that keeps you awake at night before you buy, don't buy. Watched as the stock went from 22 to 26 in the next few days...and wished I had bought (See lesson #1, "The Touch Of Gold" was working again.) 3. Then earnings came out. But they weren't blowout and the stock dove to 18.50 on Halloween as momentum investors sold. I checked stock prices that day, saw that it was below 20 and bought immediately...without reading the earnings report. Lesson #3: Never purchase a stock without reading the latest news, earnings, and 10Q.
Lesson #4: Never purchase a stock the day (or week) when momentum investors are bailing out. 4. In the 3 months since that earnings report, management has been totally silent...leaving their shareholders in the dark as to what was happening with the company. Stock continued a long and slow slide to the 10-11 range. Lesson #5: Be very wary of owning a stock in a company that chooses to not keep it's shareholders informed. Lesson #6: When you purchase a stock without doing the proper research, and the stock starts sliding, sell it. Do the research and if you are still convinced it's a good buy, buy back. ATCT announced 4Q 96 earnings yesterday and they were far below expectations. The stock has gone from the 9-10 range to the 7-8 range during today's trading. I learned some valuable lessons with this stock, and luckily it hasn't really cost me that much since ATCT represents a very small percentage of my portfolio. That's the one thing I did right...not buying very much. Hopefully someone reading this message will not make the same mistakes I made. Good luck with your investing. Back to Halloween '97: Readers Tell All
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