Thursday, October 24, 2013


For no reason I could find, shares of InfoSonics exploded yesterday, at one point trading up over 90 cents per. This represents a 100% gain from when it was discussed on this site just five months ago as a potential value investment. Interestingly, thanks to its enormous volatility, this also marks the second time InfoSonics will show up on the Value In Action page.

Mainstream investors see volatility as a bad thing. But for value investors, it's a very good thing. If prices did not fluctuate in relation to value, you wouldn't be able to buy something for less than its worth. Volatility gives you a chance to both buy when a business trades for less than it's worth, and sell when it's not. Value investors should be very grateful that volatility exists, and, if they enjoy their professions, should probably be wary of encouraging activities that would serve to decrease volatility (e.g. transaction taxes that discourage short-term trading, circuit breakers when trading bots go crazy, and other regulatory actions that prevent the full force of fear and greed from affecting the market).

I actually didn't record anything close to a 100% gain in this stock on this go around, and so I feel a whole lot of regret. But that's ridiculous; timing the tops and bottoms in the market is impossible. I bought in stages on the way down, and also sold in stages on the way up, resulting in a return that is well less than the maximum possible.

But my rational self knows that the feelings of regret will pass. The important thing is to buy when there's a margin of safety (that way, if/when things go wrong, you're protected) and to sell as that margin of safety erodes. Any investor who did that here would have enjoyed spectacular returns, without taking any of the risk or requiring any of the ability to pick tops and bottoms.

Happy investing!

Disclosure: No position


Baruch said...


So - no position ?
As far as i can see the company is still net-nets .


Saj Karsan said...

Yes, no position. Just edited the post to add that disclosure at the end.