Friday, September 24, 1999

Eeek! I've Been Downgraded


One of the pieces of mail that I look forward to -- among the pieces pre-approving me for a re-mortgage of my house at 125% of value -- is the Value Line Investment Survey. I use that service and The Motley Fool in managing my stock portfolio.

In today's issue I noticed that they had downgraded my second ranked stock to a third rank (for performance). Oh kiss of death and shades of doom, what am I gonna do now?

If one follows the Value Line system this might be the time to look at switching out of this issue into something ranked second or first for appreciation. Now, if you check my Fool profile, you will see that I list myself as of the Reformed Kamikaze school of investing. In the past I would have swore mightily, smoked excessively, and drank heavily, and I probably would have switched out of this stock into something else, figuring the ride is always better on the next wave over.

But that was then and this is now. This time I actually took the time to analyze the reasons I was in the stock in the first place (I attribute this to Foolish advice), what had changed and what my strategy vis a vis my objectives was. And you know what I found? Nuttin' honey. The company was still doing what they do exceptionally well, probably better than any other company in its industry group. Management had not changed -- the same bunch of good and prudent folks were running the operations in the same manner as before. Aha, here was an earnings revision to the downside, but that turned out to be due to outside factors that would only have a one or two quarter impact.

And since I had already determined that I was investing with a three- to five-year time frame in this stock, nothing needed to be done. So I slowly closed the cover on the binder, returned it to its place on the shelf, and went back to posting goofy messages on the Motley Fool message boards.

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