Oversold

The identification of the oversold stock is perhaps one of the most difficult and lucrative plays. How does one determine the intrinsic value of a stock. And for those that are looking for a quick bounce; which stocks are more likely to bounce back in the double digit percentage range. Large falls provide the biggest opportunities for large subsequent gains. Nevertheless Mr. Market occasionally drops that knife; making this play one of the most perilous types of speculations. (let's not use the word investment; its not an investment.)

One example; DBTK, in at 11.30 and out at 12.44 in less than 24 hours. It's not a bad 10% in a single day. What's to like; intrinsic value is high, the bottom and high end were stable. Small caps tend to oversold on any negative news (guiding 2008 lower). It had dropped 30+% from 15.30 to my purchase price. More importantly this was a fundamentally sound business, so people are going to buy back in. Key questions? Was the overreaction due to current market conditions? What factors may prop up the bottom and limit any losses.

Other positions; out of AFSI @ 15.75 and HURC @ 35+. I like both stocks, but i think HURC will hurt in the coming months with the impending slow down. AFSI is still financial/ insurance; and that market is extremely tumultuous. I will be tracking for AFSI @12-13 to buy back in, and HURC in the low 30s. BWLD @ 21ish (also being hurt by consumer confidence). I have owned HURC and BWLD for a long time; enough to enjoy splits.

In at CVLT @ 14.40