Semi Annual Exercise Mid 2012

Well, these last twelve months have certainly been a surprise and upsetting. Fortunately, by conducting these semi-annual portfolio exercises I can check back and know how the story changed. Trusting to imperfect memories can be delusional.  Unfortunately, replaying the disaster strike does not make the effects go away. Since my 2011 mid year review:

  • AMSC is down by about 50%
  • DNDN is down by about 80%
  • GAIA is completely sold
  • GERN is down by about 50%
  • GGOX.OB has become GIG and has doubledYeah!
  • MVIS is down almost 80%
  • RSOL is down almost 50%.

Why?

AMSC dropped but so did their revenues, though not through normal business problems. AMSC’s revenues dropped 75%, largely because their largest customer backed cancelled orders and is now suspected of stealing AMSC’s intellectual property. Then they tried to compete against AMSC. This one is a highly watched test case in the Chinese courts. Will China protect foreign IP or not? They say they will. This is when they can prove that they do. In any case, the resolution will take years during which AMSC has to recover.

DNDN dropped despite dramatically increasing revenues, but the increase wasn’t dramatic enough. A 20% shortfall resulted in an 80% stock decline. This one had the largest effect on my life. If the stock had only dropped 20% my search for a job and a house buyer wouldn’t be as important.

GAIA went away (Real World Trade GAIA) partly based on these exercises. I could see that they weren’t going where I wanted them to go, so I let them go. That’s investing.

GERN’s decline isn’t a surprise considering the news, but the news was a surprise. They discontinued their stem cell trials and research. I still haven’t heard that complete story yet.

GGOX.OB graduated from de-listed from NASDAQ to re-listed under GIG on AMEX. Congratulations. Their stock doubled even though their revenues were only up 20%, but some may have noticed that they have more than doubled revenues from two years earlier, and that they have new products coming out, and that they are still cheap. The stock buy-back and re-listing didn’t hurt. At least I have one success story with a lot of remaining upside.

MVIS is down, but that’s mostly because of massive dilution made necessary by supplier delays. It may be a simple statement, but it has an enormous effect. I have too many ideas of where it could go next based on more simple good or bad news.

RSOL is down, but they grew revenues by 40%. I think they have a Solyndra headache.

The market reactions to AMSC, DNDN, MVIS, and RSOL are unexpectedly, and I feel disproportionately, negative. Unfortunately, they were my largest holdings and to have two of them down 80%, and two of them down 50% has traumatized my finances, and frequently my emotions. Irrationality is hard to witness, especially when the impact is real and not abstract. Twelve months ago I thought I was on the cusp of seeing AMSC’s cables hit the market, DNDN reporting better revenues and expanding geographically and across the patient population, GERN possibly reporting that they’d helped a paralyzed person move again, and MVIS releasing a marvelous product that had been hidden by an NDA or maybe even releasing a product on schedule. What were the odds that they would all succeed? Small, of course small. What were the odds that they would all drop so much at the same time? Small, of course small; and yet, that is what happened.

The consequence is that since DNDN’s news and move in August 2011, I’ve been looking for a job. (My Jobs Report Month 9) No news yet, but I finally had an interview for an office position. My first in ten months of searching. It is part-time, but part-time is better than no-time. Besides, it is on the island; but, I’m also not the only applicant. And, someone else wants to hire me, if he can raise the money. Anyone want to fund an angel investor foundation or corporation working on innovative and positive solutions for the planet? And, someone else may have found a side door to a place where I keep knocking on the front. In the meantime though, I’ve spent almost everything outside of my IRA, and have had to sell over 75% of my depressed DNDN shares to pay the bills. At this rate, and without another source of income, my only other available asset to sell to generate money is my house; hence, my home is for sale.

My semi-annual exercise is useful. Without it, rewinding the memories could be an exercise in second-guessing and futility. It would be too easy to emotionally beat myself up. Knowing that my situation is a dramatic coincidence of bad luck doesn’t make it easier to pay the bills, but it does make it easier to understand and less personal.

Imagine the flip side. Imagine that equally small percentage possibility that all of the businesses and their stocks would’ve succeeded. It would be wonderful to look back and watch it happen. Me, my home, and many parts of my life would be much better, or at least I wouldn’t be delaying a lot of maintenance and repair (though I did finally splurge and bought glasses.)

What was more likely is what I suspected. Some of the businesses wouldn’t do well. Some would. I suspected that enough would. At least as I type this, I was wrong. The odds didn’t work out that way. Such is the nature of investing.

I’m going on a bit longer than usual here because if I don’t find the money from my business (check out my books, my photos, my consulting, etc.), or from a job (here’s a resume), or from selling my home (drop by for a virtual tour), or from some windfall (hello lottery), then this may be my last semi-annual exercise. The current value of my portfolio (pardon me as I double-check) is probably enough to make it through the rest of this year, but in some scenarios so little would be left that I wouldn’t worry about the exercise. Of course, in that time, enough of my stocks could soon enough rise to the values I think are appropriate, AMSC could clear its legal hurdle, DNDN and or GERN could announce surprisingly good clinical results, and maybe even MVIS could finally release some significantly good news. Google glasses with MVIS inside would be marvelous. So would an iPad with MVIS inside. A rapid rise in DNDN that allows time for the others to reach normal valuations could be enough for me to recover. The odds of enough of that happening are reasonable, but I’ve been living through unreasonable times for so long that I won’t make grand claims. Of course, if things became unreasonably good, well, I’d accept that. Let’s hope I get to continue posting these exercises for years and decades. Live long and prosper. And stay tuned.

Here’s the end of 2012 edition of my semi-annual stock portfolio exercise. It is a long list of links to Investor Village, The Motley Fool, and Silicon Investor because I think the discussion should happen in a broad forum. Feel free to comment here, but also feel free to post links out to other sites as well. One of the greatest resources individual investors have is other individual investors. Our shared voices can be more powerful than any official financial institution.

Investor Village
AMSC
DNDN
GERN
GIG
MVIS
RSOL

The Motley Fool
AMSC
DNDN
GERN
MVIS
RSOL
Economy and Markets

Silicon Investor
AMSC
DNDN
GERN
GIG
MVIS

About Tom Trimbath

consultant / entrepreneur / writer / photographer / speaker / aerospace engineer / semi-semi-retired More info at: https://trimbathcreative.wordpress.com/about/ and at my amazon author page: http://www.amazon.com/-/e/B0035XVXAA
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