Wednesday, November 12, 2008

Another lesson from Robert Hsu

Sell FMCN, but only if it gains 13% from now. That's basically what Mr. Hsu wrote to his China Profit Strategy subscribers in yesterday's Flash Alert.

[...] And as a result of the disappointing quarter, poor forward-looking visibility and downgrades, the stock sold off 45% today. But despite all these factors, I still think the selling is overdone, and I'd like you to wait for a bounce above $10 to sell it. So for now, hold FMCN.

A little more humble than usual (I'd like you to... instead of I want you to...). Good start.

The amazing history of FMCN starts on November 2005 when FMCN was at around $27.90 ($13.95 split adjusted) and Mr. Hsu was writing Buy FCMN under $35 ($17.5 split adjusted).


FMCN went from (adjusted prices of) $13 to $20, then $30, then up to $40, $50 and even over $60 in October 2007.

At that time, at around $60 and gaining 330%, Mr. Hsu was writing:

  • September 27th: Buy FMCN under $60
  • October 4th: Buy FMCN under $60
  • November 8th: Watch FMCN and buy it on dips under $60
  • November 29th: Continue to buy FMCN under $60

You can see in the chart what happened next. But here is what Mr. Hsu was writing during the decline:

  • January 3rd: Buy shares of FMCN under $62.
  • January 17th: Keep buying FMCN under $62.
  • January 24th: Buy FMCN under $62.
  • February 7th: Buy FMCN under $62.
  • March 6th: keep buying E-House (EJ) under $20 and Focus Media under $62.
  • March 13th: I recommend that you buy FMCN under $62.
  • March 20th: hold Focus Media (already under $40 - 33% loss for those who bought it at $60)

No news until yesterday. I'd like you to wait for a bounce above $10 to sell it

FMCN just closed at $8.83. Mr. Hsu and some of his paying subscribers burned some 36% of their money. Those who bought at $62 as he was suggesting are now losing 85% (eighty five percent).

Selling at $10 will bring a loss of 28% to 83%. But FMCN still has to gain 13% to go to $10...

4 comments:

Anonymous said...

I have been subscribed to China Strategy for a year now.

I don't think i have made some money on any stock he recommends.

R. Hsu is not well informed about stocks. His judgment is poor and he always brags in his newsletters.

Anonymous said...

And btw, you can see his portfolio on http://www.tickerspy.com/member.php?pid=18534&mid=3107&psort=mcap

Muggs said...

I was a subscriber/believer. I sold all my FMCN last year except 20 shares, thank God. Once again, everyone's a genius in a bull market. Hsu's two worst strategies are recommending to buy too high and not taking profits or small losses. He's strictly a fundamentalist and ignores any technical trading signals

Anonymous said...

This guy is a fundamentalist that ignores Price and Value.
He only focuses on Growth. No margin of safety (see Graham), no care for P/E, no care for Price/Book, no care for financial stability (D/E, Curr Ratio, ...)