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Tuesday, 14 August 2007
Mesa Laboratories (MLAB) "Trading Transparency"

Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.

A few moments ago, upon checking my holdings, I saw that my Mesa Labs (MLAB) stock had plummeted and passed my (8)% loss limit.  In fact, MLAB, as I write, is trading at $21.38/share, down $(3.37) or (13.62)% on the day.  I sold 210 shares at $22.20 which were purchased 5/23/07 at a cost basis of $24.05.  Thus, I had a loss of $(1.85) or (7.7)% on the purchase.  Ironically, when I entered the sale order the stock had a greater than (8)% loss and by the time the order was filled it had rebounded a few cents to be sold just under this.  Anyhow, that stock is now history and I shall be 'sitting on my hands' with the proceeds as the market corrects and my own portfolio tells me it isn't a good time to be buying anything!

Ironically, on August 13, 2007, MLAB reported solid 1st quarter results as far as I can tell.  Sales climbed 17% to $4.3 million from $3.7 million and net income grew 28% to $1.01 million up from $790,000 or $.31/diluted share, up from $.25/diluted share last year.

In spite of the good earnings, in light of my own sale, I have reduced my rating on MLAB and

MESA LABORATORIES (MLAB) IS RATED A HOLD

Thanks so much for stopping by and visiting!  If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 9:47 AM CDT | Post Comment | View Comments (9) | Permalink
Updated: Tuesday, 14 August 2007 9:48 AM CDT

Tuesday, 14 August 2007 - 10:36 AM CDT

Name: "hap"
Home Page: http://hapmoorii.blogspot.com

Have you ever considered sitting on your hands until late July or early October as part of your strategy?  Just curious how you play the normal summer dip or if that even factors into your strategy.  

Tuesday, 14 August 2007 - 12:02 PM CDT

Name: "Robert Freedland"
Home Page: http://bobsadviceforstocks.tripod.com/bobsadviceforstoc

Hap,

Great question.

I think the proverb is "sell in May and go away". 

You are right that this doesn't figure into my idiosyncratic approach to investing.  That doesn't mean it isn 't a good idea.  Or that you shouldn't do that.  But I don't.

My entire strategy is that I try to pick the highest 'quality' stocks and then let my portfolio determine my response to the market action.  This is what I refer to as my "Zen" approach....sort of listening to my own stocks and either buying or moving to cash based on their price action.  I am not sure that this will be successful.  But at this time, this is my approach.

Thanks so much for taking the time to comment and participate on this website.

Bob

Thursday, 16 August 2007 - 2:15 PM CDT

Name: "hap"
Home Page: http://hapmoorii.blogspot.com

It seems like mid-April, things often turn south, but that wasn't really the case this year.  Regardless, it does appear the real painful drops are setting in just a week or two late.  I tend to buy these drops in my mutual funds and was just curious if you ever take them into account. 

Thanks for the always insightful answer.  I really need to save up some money so I can get more involved again and post more than the occasional comment.  You're slowly winning me over with the buy high, sell higher method, and it would be nice to get some play money set aside to give it a try.

Wednesday, 14 November 2007 - 12:53 PM CST

Name: "Mark"

Hello......I've started following Mesa Laboratories because it was just recommended by a well-known newsletter.

I don't think you were sufficiently taking into account  that a THINLY-TRADED STOCK behaves different than almost all others.

Mesa Labs is EXTREMELY thinly traded.......There are days where just 100-200 shares are traded for the whole day. Wild swings are ROUTINE for such stocks, sometimes within just a couple of hours  --  up, down, and maybe back up again. FOR EXAMPLE, this morning here was the "spread" on the stock (i.e. the difference between the best "offer" and the best "ask"):

23.03, 24.69

That means that if you wanted to BUY it, you'd have to pay 24.69, and at least for a moment, that would be the stock price.

If someone else wanted to SELL a few minutes later, the price would be 23.03.

And there would SEEM TO HAVE BEEN an immediate 7% drop.

But it would have been just an illusions.

Cliff's Notes: You can't go into a thinly-traded stock with anything like an 8% window.

Wednesday, 21 November 2007 - 11:49 AM CST

Name: "Mark"

Right now is another example:

BID 23.02

ASK: 24.81 (by the way,  I misstated these above as "offer" and "ask")

As in the above instance, the spread is such that there could very well even be CONSECUTIVE TRADES that show a 7-8% rise or drop.

The main point is that one can never meaningfully go into such a thinly-traded stock with anything like an 8% window.

Such stocks inherently have swings that are literally meaningless. 

Wednesday, 28 November 2007 - 12:42 AM CST

Name: "Mark"

......no comment, Bob?

I'd think you'd want to comment, because this gets to a BASIC PRINCIPLE of investing in a stock like this.

I would guess that MLAB is more thinly-traded than literally 99% of the companies you look at.

 I wonder: Do you DISAGREE that you can't have such a narrow window on such a stock?
Or, perhaps, did you NOT REALIZE that this stock is so thinly-traded???

Wednesday, 28 November 2007 - 5:29 AM CST

Name: "Robert Freedland"
Home Page: http://bobsadviceforstocks.tripod.com/bobsadviceforstoc

Mark,

You have made some excellent points on Mesa.  I do not disagree.  Tight stops are not always appropriate for the thinly-traded and highly volatile stocks like Mesa Laboratories.  

I dol believe that stops are important.  Perhaps on thinly traded stocks with broad bid-ask spreads, a 16% stop would be more appropriate?  I don't know.  But overall, there have been enough stocks with enough trading volume to provide me with ample opportunities.

You have made some excellent points and I am sorry if I did not get right back to you on them.  My silence did not mean I disagreed.  I just don't have an easy solution.  Good luck, thanks for writing and visiting and keep me posted with your own investing progress.

Bob 

Wednesday, 28 November 2007 - 1:00 PM CST

Name: "Mark"

Thanks for the nice reply!!

I agree that "stops" are appropriate, and a LARGER "WINDOW" is needed for thinly-traded stocks.

Not necessarily for "volatile" stocks in general, but absolutely for thinly-traded stocks, because it's only in those that the large brief swings mean absolutely nothing. 

Friday, 30 November 2007 - 7:58 PM CST

Name: "Mark"

An additional point that may be more than just a semantic one:

There's a distinction between "thinly-traded" and "volatile."

 
Thinly-traded stocks (like MLAB) jump around without necessarily being "volatile."
And I think it's important for people to appreciate the distinction.

 The most common measure of a stock's volatility is its "Beta."
Mesa Laboratories, as luck would have it, has a LOW beta. It's less "volatile" than the average stock. So, it's an example of a NON-volatile stock that can oscillate quite a bit, because of how thinly-traded it is.

It is important to appreciate these distinctions when going into such stocks.

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