A pounding the table moment

It seems the gold traders were listening to what I was saying. I said last night that gold was too high and was probably not sustainable in the short term. Gold went as high as $1818/oz over night but suddenly turned around and dropped by over $50 today to come down to around $1760 or so. As much painful as it appeared to be, it is actually healthy for a long-term bull trend. If you want someone to continue to run for a long time, you got to allow him or her to take a rest or slow down. Otherwise, he or she will collapse.

Gold is not the topic for today. Actually I want to talk about Cisco, which I discussed late Apr. Cisco (CSCO) is a value investment for me. I considered it a good value to own when it was below $20 at the time I introduced it. The market apparently did not agree with me. It came down further. When it dropped to around $15 about 10 days ago, I was thinking to write this blog as I was really consider it as "a pounding the table moment". It was so valuable to me. But I didn't. I figured it was never a good idea to talk about a long position when the overall market was crashing. However, for myself I could not help but taking the risk to go in. Below is the position I got last week. It was a poor timing since you know what happened Monday this week. The market crashed by over 6% and everything except precious metals came down with it. CSCO plunged to below $14 after I went in. The position I held went down with a paper loss of over $4000 at its nadir.  I was really not worried. Cisco is doing all the right things now. It is streamlining its business to refocus on what it is doing the best as the Internet plumber. It is also cutting costs to improve its finance and profitability. Finally it surprised the whole world with a great earning report yesterday. CSCO is jumping by 16% today. All my paper loss recovered with a jump of over $4200 today in my position value.

CSCO Jan 19 '13 $15 Put

2.29

-1.16

-33.62%

$4,280.00*

-40

$2.60

$839.34*

8.04%

I'm more confident now about CSCO as a long-term value investment. While it is still possible that CSCO may come down again with the overall market, it will just become more valuable with a decreasing share price. I may add more to it if such an opportunity presents itself.