Happy Memorial Day weekend, everyone. I've got a house to clean up after a big get-together we had on Saturday, so I'll make this brief. Look at this chart of CAR, which is Avis, the big auto rental firm:
Now, I did all right with my "lottery picks" from mid-March until now. I made 100% in some cases, and nearly 200% here and there. I certainly didn't capture all – or even most – of the rise, but in the account where I allowed myself these battered picks, I did pretty well.
I pick CAR as an example of why I think the easy money has been made in lottery-land. This stock had gone from about thirty dollars to thirty cents in the course of eighteen months, but from March 3rd to May 20, it went up well over 1,000%. I did not participate in this move, but it stands out as one of the more extraordinary lottery stocks I pick.
Over the course of the bear market, we've seen a number of these sweeps upward on battered issues, although this one is by far the most dramatic. But the cold fact of the matter is that (a) there was a reason the stock lost 99% in the first place; (b) 1000%+ moves are not sustainable; (c) the amount of overhead supply at these levels is staggering.
But here's the more important point of all – – -the nature of percentages can wreak havoc on a portfolio at levels like this. If you bought in at 40 cents, you're sitting pretty, and you could be greedy and see if this thing manages to get to five, six, or seven bucks. But a person who bought on, say, Wednesday, is already looking at a 20% loss, because there is hardly anything holding prices up after such a swift mood.
Bottom line for me is that I'm less and less inclined to add lottery picks, and I'll be making my stops on the ones I do have increasing unforgiving.
