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How the market can make fools of us all

Today's Financial News - Posted April 22, 2009

Our editors thought we had it all figured out. We sought to diversify our recommendations globally, to pick traditionally resession-resistant industries. But we bagged some losers anyway.

by Laura Cadden, TodaysFinancialNews.com

Baltimore (TFN): It happens to even the best analysts. They make bad calls on occasion (just ask Buffett).

Early last year, we here at TFN saw the tough times coming. We looked to companies that we thought could weather the storms well with products that are essential (or at least attractive) to a penny-pinching consumer. Firms with global diversification and if they also happened to be a dividend stock, all the better.

And overall, we got it right.

In the past year, TFN readers had the opportunity to make gains of 50% on Avalon Ventures, 40% on Freddie Mac, 29% on shorting Apex Silver Mines, 55% on Rex Energy, 40% on Dollar Tree Inc., 40% on Pyramid Oil, 27% on Overstock.com, 23% on Stem Cells Inc., 40% on Rostelecom OAO, 33% on Vimpel Communications, 66% on CityGroup Inc., 47% on Ford, 50% on Smith & Wesson Holding Corporation, 51% on Aastrom Biosciences, and 35% on Vanda Pharmaceuticals — just to name a few!

Then there are picks we got wrong.

Some we’re still holding — waiting for the rebound we believe still will come.

But for the companies listed below, we realize it’s simply time to let go. (Keep in mind, most would make a great investment at current prices.)

1) Costco Wholesale Group (NASDAQ:COST)

Back in February 2008, we felt the rumblings of upcoming economic hardship. So we thought, what could be better than a discount retailer? In fact, our January 2008 Dollar Tree pick brought readers gains of over 40% when we recommended a sell in May last year. But things haven’t worked out that way for this wholesaler. Shares have continued to stay over 20% down from that initial buy price.

If you bought back then, dump your shares of Costco Wholesale Group (NASDAQ:COST).

2) Unilever NV (ADR) (NYSE:UN)

In April of last year, we thought the global presence and products of Unilever would make it the perfect investment. But as the economic crisis became global, Unilever’s share price simply tottered and fell. Never to recover… at least, not so far.

If you’re still holding on, we recommend you throw in the towel and sell your shares of Unilever NV (ADR) (NYSE:UN).

3) Logility Inc. (NASDAQ:LGTY)

Back in July, we felt this supply chain management solutions companies would see big profits helping cash-strapped firms seeking to improve their logistics and processes. It would seem such companies relied on stimulus help instead.

Drop any remaining shares you might have of Logility Inc. (NASDAQ:LGTY).

4) Pizza Inn Inc. (NASDAQ:PZZI)

Also in July, we liked Pizza Inn’s string of successful quarters, insider buying and global expansion. But as peoples wallets thinned, they just didn’t buy pizza like they used to.

Let go of your shares of Pizza Inn Inc. (NASDAQ:PZZI).

5) Utilities Select Sector SPDR (NYSE:XLU)

Everybody knows that utilities are a safe investment in rough economic times, right? Wrong. Again, we just can’t seem to make it back to the levels we paid for this fund back in August.

Sell you shares of Utilities Select Sector SPDR (NYSE:XLU).

6) Altria Group (NYSE:MO)

So much for the old belief that vice stocks are the way to riches in a recession. Even after a good earnings call today, the share price is still way down from our September buy price. Their products include such past money-makers as cigarettes, chewing tobacco and cigars.

If you own shares of Altria Group (NYSE:MO), take this opportunity to cut ‘em loose.

7) General Electric (NYSE:GE)

In October, we felt certain that GE would bounce back any day. Six months later, we’re still waiting to get anywhere near our buy price.

Let’s stop waiting — sell your shares of General Electric (NYSE:GE).

Whew! That’s it for now.


Next Article: Joke of the day: Obama scolds the credit card industry

Posted by Laura Cadden · Filed Under Investment Strategies 

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