RIMM: Research Still In Commotion

It's been one month's time since we last looked at RIMM. When I looked at it this morning, the words of the reporter who was on sight in Lakehurst, New Jersey at the time of The Hindenberg disaster came to mind, "Oh-h-h...the humanity."

This chart also reminded me of my early experiences playing the stock market, when I would hold onto stocks like this one, as they went down...down...down...UGH.

As a result, I determined NEVER AGAIN to "believe" in stocks, regardless of what the analysts told me about how good the fundamentals are. We can see from some of the comments on this chart that the analysts almost were trying to outbid each other on their upside targets for RIMM, right near the top (I lost some other analyst targets when my computer crashed). We also can see that the analysts abandoned the stock in droves on April 29, more than a month after it broke down below a Head & Shoulders Top, on earnings. Shareholders went through a second crash opening in as many months. UGH.

"Where there's one cockroach, you'll usually find another."

This chart is one of many examples why I always say, "If given a choice between good fundamentals and a lousy looking chart, defer to the chart."

This chart also is an example of why technical analysts say, "First the chart...then the news," meaning that if you see a problem in the chart, like we did when the H&S Top broke down, we likely will find out later about "the bad news," which we finally did when the company lowered Q1 guidance.

"First the chart...then the news" can get into a bit of TA snobbery, which I don't care for. Charts don't ALWAYS make it as clear as this chart did, that the stock was going to tank. But, when they do, we're well-advised to pay attention.

One of the most difficult things for us to do as traders and investors is to take a loss. Even if it isn't a very big loss, it's hurtful to our "egos." None of us wants to feel like "a loser." We need to get over that. Recognize as quickly as possible that "the trade didn't work out." Not, "We're losers." Get that ego out of the equation. It's very costly to us.

Among the top reasons for BIG losses in stocks like RIMM are:

1. "The selling in RIMM on earnings is a gross over-reaction. The bad news already is priced in on today's big selloff, which is unwarranted. I'm NOT selling."

2. "This selling is stupid. Look how many analysts have targets of $80...$90...$110 for RIMM! You guys are fools for selling. You'll be sorry. See you at $110!"

3. "It isn't a loss until you sell. I believe in this company. I'm holding, no matter what!"

4. "RIMM is a bargain on this earnings selloff! I'm doubling down!"

5. "Are you kidding? All of these ANALysts are now selling RIMM? What fools! I'm doubling down again. This stock is unbelievably cheap at $49."

I read all of those comments, or some variation, on the RIMM Yahoo Message Board during this wicked smackdown in the stock.

Oh-h-h...the humanity...