I wanted to share with all of you my own disappointment at having to part ways with my recent purchase of 134 shares of Ecolab (NYSE:ECL) that I had just purchased on 2/6/09 at a cost basis of $35.54. I sold these shares on Thursday in the midst of the continued market correction at a price of $31.5948. This represented a loss of $3.9452/share or 11.1% since purchase. (As I wrote this, ECL was recovering somewhat, trading at $32.04/share for a loss Thursday of $2.21 or 6.45%).
After an initial purchase of stock, my own trading strategy dictates a sale at an 8% loss, regardless of the duration of my ownership of that stock. And that includes selling shares after only 6 days!
With this sale on a decline, which for me means a sale on 'bad news', I am back to my minimum of 5 positions and shall be 'sitting on my hands' with the proceeds of this sale--thereby moving once again a little more into cash and away from equities!
What triggered the slide was apparently the disappointment in the 4th quarter 2008 earnings results which were announced Thursday. Excluding one-time expenses, earnings came in at $.45/share, unchanged from last year and in line with expectations of $.45/share. Revenue, which climbed 3% in the quarter to $1.48 billion from $1.44 billion was a bit 'light' from where analysts had pegged the company---$1.51 billion.
In addition, the company reduced expectations about the current quarter, guiding now to $.30 to $.34/share, well below analysts' expectations of $.41/share.
Even though full-year guidance was essentially in line with expectations, the disappointment on last quarter's revenue and the decreased guidance for the current quarter, was enough to make investors turn tail on this stock and resulted in my own sale as the stock hit and passed the 8% loss limit for me.
Disclosure: The author sold his shares of ECL.