SDRL

[Dividend Watcher]

(11-28-2014, 09:25 AM)Robandcindy2 Wrote: As I have posted before, I hold a lot of stocks for this very reason: I'm out on a trip, out of "financial touch" due to the hours I am flying, and WHAM a stock tanks almost unexpectedly. I slept fine through all of this, but Rule 1 is don't lose money so SDRL's actions still kinda torques me off.

Rob, I feel your pain. I don't own it but I can relate to the sequence of events.

I don't want to criticize but don't you think your Rule 1 is a little too rigid for investing in stocks? I've made mistakes where I've sold something at a loss realizing I've made a mistake and shouldn't have been in it in the first place. With that rule, you set yourself up to negative thinking and it could affect your judgement on the actions needed to be taken.

I think Eli over at SA did a little disservice by writing the article recently claiming that even with a 50% dividend cut you would come out ahead. It didn't take into account what could have been the worst case sequence of events and led you into confirmation bias. It even had me questioning for a minute whether I made a smart move buying into ESV and HP. Maybe I did -- we'll see how that shakes out.

What I see is a company that leveraged up in anticipation of a never-ending boom in the oil patch and a management that is willing to lie to the world about its prospects. You can't tell me this was a snap decision made by the board. Boards of large corporations are generally hand-picked by senior management and for the most part are in agreement with what senior management is doing.

If you're willing to sit through this time and don't need the income to live, you may be better off holding. This could take several years to work itself out. If it were me, I'd have my stop-loss order in and sit on the sidelines until things cleared up a little better to decide where to place the remaining funds.

I wish you luck thinking through this one. I'd be pretty disappointed myself if I were in a similar situation. Oh wait, I believe I am. I'm watching to see what Mattel's management is going to do with their declining business. In the meantime, I'm sitting on a good sized loss.