Sold Out Honda and Hewlett Packard Yesterday
I sold out of these two stocks yesterday. I'm currently holding the cash. The CAPS picks are now closed.
With Honda (HMC) I went back and reminded myself why I bought it. I bought it during the financial crisis at something like $18/share. I should have sold it when it got to $40. Instead I forgot why I bought it and started treating it as a longterm hold, simply because I told myself I like to hold stocks forever. I did, and I do, but I have always thought that the Korean car manafucturers are likely to eat a nice chunk of HMC's and TM's lunch in the near term (next ten years). That, combined with the new, more cost-efficient structures for GM and F and Chrysler under Fiat, is not a recipe for a long-term hold of either HMC or TM. It's just one man's opinion. So I did what I should have done a year ago and a cashiered my still-large gains. I think the buy was not a mistake. But forgetting why I bought it was a mistake.
With HewlettPackard (HPQ) I just started to think, you know what, I've got tons of tech exposure, and why should I be in this stock when I think Intel and Microsoft and Apple and Google are all much better long-term holds. Again, why did I buy? I bought because I perceived value in a turnaround play. Not only that, but I did so before there was a clear catalyst for the turnaround. Not only that, but as Jeff Matthews has blogged about many times, HPQ is a serial manipulator of its earnings. Not only that, but even if Meg Whitman turns it around, it's a generally low-margin business, and getting lower-margin, as EDS services are not particularly high margin. Maybe it gets turned around, maybe it doesn't. But I'd rather have my money in Apple or even in Microsoft or Intel or Google, if I'm going to play in this sector. So here I have decided I made a mistake, not a terribly costly one, but a mistake.
As a reminder, I used to be "dumberthanafool." Also, I have another CAPS player now, called "TheDumbMoney2," which actually tries to play the CAPS game as it is meant to be played.