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My Best Investment/Trade Of 2010

13 January 2011 9 Comments

At the depth of the oil spill crisis, I decided to buy a bunch of shares of Transocean (RIG).  I got in on the shares in the low $50’s.  I didn’t time the trade perfectly, because the shares actually went on to go into the mid/low $40’s.  On situations like this, however, you don’t have to time the trade perfectly to do very well.  I bought the shares because I’ve always liked this company, and I saw that the focus of the public and the media was on BP, not on Transocean.  I also figured that the markets were overreacting, pummeling the stock, sending it down from around $90 to under $50.  This is a prime example of buying a quality company that is suffering from a short-term, temporary situation.  Now, the stock is around $77.  I’m up over 50% on the shares already.  The question now is whether to sell the shares and book the gain or hang on to them.  I’m probably going to hold the shares, since Transocean is essentially the #1 offshore driller in the world and the business should only get better as the world needs more oil.  I also see the price of oil going higher which will help this company even more.  This is an example of being patient with your cash and buying distressed assets.  The opposite of that is buying Apple (AAPL) at current levels.  Patience.  Patience.  Patience.

9 Comments »

  • Money Beagle said:

    Congrats!

    To protect your investment, you should put in a trailing stop so that if it goes down a certain percentage or dollar amount, you'll trigger a stop. Barring a big gap down, you'll keep your gains protected, and the stop will continue to adjust accordingly if the stock continues to increase in value.

    Good investment. Here's to continued success.

  • Kingpin said:

    Hold it, that should have room to run at that price- You could get an at the money put to cover you for extreme volatility. Remember how those stop loss things did in the flash crash – blew right through them.

    Wait at least until it is a long term capital gain for you.

  • Bryan said:

    What was your worst investment of 2010?

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