Standing firm

I've said before that you can pick a good, strong stock, and still see the price tumble due to fear from other investors. What are they afraid of? Why, of being WRONG of course.

But it's the wise investor who, like the wise parent, knows that sometimes, you gotta make mistakes and be wrong to learn something. That way, you know when you get something RIGHT.

Case in point: I wrote weeks ago about how I was drooling over a certain stock, First Solar (FSLR). It's a leader in it's field, it's a strong company, and meets many of the marks that I look for in a good stock.

Furthermore, it posted earnings this quarter of $153.3 million. Not bad.

So WHY is it down 27.65% today? It's MAKING MONEY... what's the problem?

This is where your ovaries of titanium have to come in. The price dropped because... are you ready?: It was downgraded by several investment companies.

Investment companies will come out with their opinions on certain stocks: Buy, Sell, or Hold. If they like a stock, and they think it has immediate growth potential, they'll say, "Buy." If it has longer term, but not necessarily an immediate return, it's probably a "Hold." And obviously, if they don't like it, it's a "Sell."

I'm not saying these investment houses don't make some very accurate, and well-founded calls. However, YOU as an investor, need to know your stock.

Am I pissed that I'm losing money today? Sure. But on the flip side of that, I KNOW this is a good company, so the lower the price of the stock, the more I can buy for cheaper, and the more return on my investment I'll make when it goes back up.

Not every stock, though, DOES go back up, and you should be aware of that. Even good stocks sometimes reflect mismanagement of a very good company, or the CEO runs away with the profits down to Brazil. It's why I always say not to invest more than you can lose, because someday, you MIGHT lose it.

I KNOW First Solar is a good company, so unlike the rest of the sheep, I am not freaking out, and I will not sell. What I WILL do, is see the opportunity here to invest only slightly more money, and get a better return later.

Sometimes, when the lemmings are flocking, you have to know when to stand firm.