The crazy world of Pandora

Pandora (P) is really showing schizophrenic volatility right now, with 5% swings every other day. So trading it is speculative opportunism at best...

I think my motto is becoming:
- Dive in if you dare
- Take the money and run when you can

This trade made 5.5% profit in 4 trading days.  I had a hunch that it was time to cash out yesterday morning, and the trade also exceed my 1% profit per trading day rule. Lucky I did,  as it dived over 6% the next day on the strength of the words of wisdom from one analyst, who seem think Songza is now flavor of the month. My quick check of Songza online made me want to stay with Pandora.

My trailing stop trigger point was $11.50, but at the last minute I bailed and reduced it to $11.25. Interesting, it just traded at $11.52 before the dive began on yesterday afternoon, so I would have just got to my trigger point if I had not lost my nerve.

Of course, you can see from the chart that if I had simply left my entry at $8.70 in play, I'd have potentially made much more in the last month.  But the wild volatility would have made the last month nerve-racking indeed. Making clear trades within a single rally leaves you feeling a little bit in control of what you are doing. However after the Facebook debacle, it's debatable whether any social media stocks right now can be traded with any degree of control, or whether the market has any clue how what the valuation of these stocks should really be.

Here's the 1 hour chart so you can see just how volatile P is from day to day.

June 1 2012

Holy crap. This image says it all. DJI losing 2.2% in a single day, 2012 now in negative territory.

On the bright side, I sold my losing HLX position at 'just' a 6% loss yesterday. It's a volatile oil stock, so dropped another 7% today.

Also on the bright side, I'm glad my 401K is 45% cash right now, and am also glad that my decision to never invest in rip-off mutual funds, but instead put all my contributions in cash in my brokerage account. That forces me to actually make a rational decision, rather than just pray and hold as most 401K investors are told to do. As my employers quarterly match went in yesterday, if I had been automatically investing, it would have bought funds at yesterdays price and promptly been decimated the very next day. I estimate 99% of 401K investors automatically cost average into standard funds because they are told to do so by people who simply don't have any better ideas. But in the current economy, I think dollar cost averaging in mutual fund is basically a way to channel money to a mutual fund company rather than your retirement. I only wish I'd liquidated every fund I had back March when I wrote that things were due to a correction.