The Aftermath

RIMM opened near its after market close of 48.61. Immediately after the open, the selling pressure began. The stock finished the 10AM trading hour at 47.15 and meandered between 47.75 and 47.30 for the next few hours. I decided that I should not let this opportunity slip away, even though my current holding was close to 10% of my trading account.

I still had cash left in my main trading account, but to raise more cash, I sold my position on NOK and used all my cash to triple my RIMM position. I bought additional shares at 47.32, at what seemed like a great bargain. I entertained the idea of buying RIMM for my other accounts because I did not want to liquidate more positions. Fortunately, I stopped myself.

At the low of the session, around 3PM, RIMM traded for 46 - briefly going negative for the day. It closed at 46.64, nearly unchanged after reporting strong earnings. MY P&L took a hit because I lost some of my original gains. I now hold a RIMM position with an average price of 46.30, close to today's closing price.

Why did I increase my position to 23% of my account when my rule is not to exceed 10%? Because the fantasy of huge profits took over my will. I still expect RIMM to trade up to 56 in the near future. That is nearly 20% from where I bought my last position. I think that it will be very easy for RIMM to trade up to that level, even though today the price was nearly unchanged.

I rarely like to hold concentrated positions, but I concluded throughout the trading day that if RIMM goes down by 5%, my trading account will decrease by 1.1%, but my portfolio will only decrease by 0.65%, because RIMM is only 13% of my overall portfolio. I won't go broke even if RIMM decreases 10% from my average purchase price. It will hurt, but I won't be out of business. Six months from now, I do not want to see that RIMM increased to 60 and that I could have bought at today's closing price of 46.75. That would be too much of a regret!