Spin-off stock Clearwater Paper (CLW) has been separate from Potlatch Corporation (PCH) since mid-December 2008 and it is time to check on how it has been doing since. Looking at the chart below, the first question that is running through my mind is ‘Why isn’t there a disclosure of ownership interest on the bottom of this post?’
Splits: none (chart from Yahoo Finance)
Clearwater hasn’t done too badly for its shareholders in the nearly year and a half on its own, has it? Showing an almost classic spin-off stock chart picture, the price dipped immediately after the spin-off, consolidated and moved higher, only to make one more nerve jangling trip to the down side before started a potentially very rewarding trip upward for those who were on board.
So, why might someone not have taken advantage of this “secret” situation that was right out there in plain sight? There were lots of “good” reasons for not taking action and clearly they weren’t good enough.
OK, Fall 2008 wasn’t a great time to be thinking about getting into a new long position . . . or was it? Not many people were, but when was the last time that very many people were making very much money? And, even if you had had the nerve to put on even a small trade, how would you have dealt with that second dip? Would you have re-entered on the next move up?
The central point here has to be that the times during which it is hardest to get into a good trade are exactly the times when you have to have the mental discipline to shut out all the crowd noise, decide what your system calls for you to do, and do it! By the time everyone knows it’s a good idea, it is too late.
Finding potentially rewarding situations is not the biggest challenge. Setting aside all the internal barriers to making those trades is the big challenge.
And that, my friends, is the real frontier here. But that’s no secret either. What apparently is a secret is what you have to do today, tomorrow, and the next day to build that self-knowledge, self-management, self-discipline when it’s clear you need more.