What a day!
Linamar released its earnings last night and its shares got crushed today.
14% drop… Wow. I never had this much of single day drop last 3 years.
Although my cost base of Linamar is $44 and $52 so I am still up 50% and 27% each after the crash but still amazed to see a solid stock gets crushed like this.
As I said in my previous portfolio update, I have taken some profit off the table by selling off 25% of my position of Linamar as this is a cyclical company. I also thought that I wanted to sell another 25% off a couple of days ago before the earnings but I did not execute it (I thought I am bad at trading so I decided to leave as is) and it was too late hahaha.
Markets always kept me humble but when things like that happen, I get even more humbled. This was about 7-8% of total portfolio so that means today my portfolio shed about 1% of value.
People panicked and sold this off badly. Probably some of stop losses have got executed and that added to further drop or a threat to NAFTA renegotiation did it. Maybe it is the stop loss, little bad but still ok performance, peak-auto psychology, NAFTA threat and Linda’s kinda bad conference call all combined.
Investor psychology kicked Linamar hard today!
Am I going to sell this?
I don’t know whether it will be another bloody day or bounce back when people realize that they over-sold this tomorrow but I will just stick to the fundamentals as that’s all I am good at. The numbers were still pretty good and again, they made tones of $… They are still up by 34% for 1 year so you know… still much better than the markets..
One thing to keep in mind though about cyclical stocks…
When they drop, they drop like there is no tomorrow and will start to lose money very quickly so timing is everything when it comes to investing in cyclical stocks.
Crash of Linamar reminded me of Priceline’s epic 14% drop yesterday. Such a great company can sometimes get hit badly. What an interesting markets! Isn’t it?
Anyway, it was a fun day today! 🙂