Today we have a sell on a stock recommended by Cabot Stock of the Month in last week’s Investment Digest. It’s never satisfying to admit a position hasn’t worked out, especially shortly after getting into it. But you can’t be a good investor without taking losses, which is why rules like stop losses are important. Zillow, Inc. (Z) has broken the rules according to Cabot Stock of the Month, as Editor Timothy Lutts explains below.
“Zillow, Inc. (Z) needs to be sold, and the reasons are these. One, our loss is 20%, and our rules say we can tolerate no more. Two, it’s been three weeks since the stock’s last high-volume buying day; even last week’s big market bounce saw the stock underperforming, and on low volume, too. And three, Z is now trading below its May lows, telling us the intermediate-term trend is still down. SELL.”
- Timothy Lutts, Cabot Stock of the Month, June 13, 2012