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- Sell all shares of Capital One Financial (COF, news, msgs) at the open.
- Sell all shares of Starbucks (SBUX, news, msgs) at the open.
- Use the proceeds to buy shares of Crocs (CROX, news, msgs) at the open.
Strategy Lab is MSN Money’s stock-picking challenge. To learn more about the game -- and the contenders -- click here.
One mistake many investors make is to fall in love with the stocks that they own. One consequence of this behavior is that we tend to hold our losers too long, and nothing destroys a portfolio's performance like one or two big losers. Given that we start off by buying stocks that are beaten up, it's especially important that we jettison those stocks that don't bounce back as expected.
As such, I'll cut my losses in two stocks -- Capital One and Starbucks -- by selling all shares at today's open. I believe in both companies long term, but the short-term technical underpinnings continue to deteriorate, suggesting that the additional downside risk is simply too high. Instead of exposing the portfolio to the possibility of further losses, I'll take my lumps and move on.
One stock I want to own is Crocs. The stock has taken a beating in recent sessions for missing on the top line last quarter. Guidance was also a little lighter than expected. This sent the momentum traders heading for the hills.
While the stock will probably spend a little more time probing for a bottom, this well-managed company with incredible growth rates and a slew of new products due to hit the shelves is a must-own stock for long-term-growth investors. For more on Crocs, see my blog post on MSN Money's Top Stocks blog site.
I'll use the proceeds from Starbucks and Capital One to buy as much Crocs as I can get my hands on.
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