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Winner to loser to winner

When you lose 25% or so of a stock in a brief time, you would like to know why, so you do not commit the same error again. It happened to me several times.

Recently it is CBEH. Fundamentally it is a perfect stock with little debt, very good P/E compared to its average and the average of its sector. However, you have to trust the balance sheet of a Chinese company.

I bet technical analysis will  state otherwise. It has a lot of shorts - about 25% of the float.

I have two more bets on the stock as the risk level is about 25% less. Doubling down is not a smart move. However, for fundamentally sound companies, I make exceptions. I bet hopefully some hedge funds will buy the stocks and kill the shorters.

I have similar experience with CROX. I started buying it and still losing until the last bets that had returned more than 100% but still did not cover the losses.

It is not a guide but my history would repeat itslef. Will update this post in a year to see how CBEH will perform. The lessons  to me are:

1. The stock could be a loser even it is fundamentally perfect. Diversify.
2. Technical analysis has its merit. I do not use it even many web sites like Fidelity provide it.
3. You can still profit on these stocks when some fund managers express interest or shorters lose interest.
4. The big differnce between CBEH and CROX is it is a Chinese company where the government does not have full regulation so far. The company's CEOs can manipulate the company's assets like paying them a big bonus.