Selling ULBI

Ultra Life Batteries.

They make batteries. They've been selling more and more of them and improving their earnings over the last 5 years. They just got a big contract two days ago... Everything seems to be well with this company...

And yet, I've lost over 15% of my allotted capital over about a week. Ouch. While the market as a whole was going up... Double Ouch.

Why is this happening? I don't know.

Perhaps it's nothing. Perhaps there's something nasty behind the scenes and smart people are running away.

Regardless of the reason, I've already lost a sizeable amount of cash and I'm not going to wait for it to bounce back. So, I'm selling ULBI and keeping it on my radar to see how much lower it goes or how fast it rebounds.

The most important rule in investing is: DON'T LOSE MONEY!

Why? Because a 15% loss hurts more than a 15% gain.

If I lose 15% of 100$, I have 85$ left.

But if the stock rebounds 15%, I won't be back up to 100$, I'll have 97.75$. Bummer.

If I take a 50% loss on a stock, I then need a 100% gain to get back to break-even! These losses accelerate rapidly and I'm trading with cash only. If I was doing this on margin*, a 20% loss could send me to the bankrupcy courts!

I avoid margin like the plague.

*Margin is when you borrow money to invest. It works great as a multiplier when you're winning but it destroys your even faster when you've made a mistake. I think it's not worth it.