Stop Losing Capital In BlackBerry Stock (BBRY)

Every time BlackBerry Stock makes a jump or an announcement my email overflows. I have no problem with investors emailing with ideas and questions on BlackBerry Stock but most investors who are emailing continue to get hammered trying to recover their losses in BlackBerry stock.

The majority of investors don’t understand that BlackBerry stock is in serious trouble. BlackBerry Stock trades on the NASDAQ under the symbol BBRY in USA Dollars. It also trades on the Toronto Stock Exchange under the symbol BB in Canadian dollars.

This article follows BlackBerry Stock on the NASDAQ exchange with the symbol BBRY.

BlackBerry Stock (BBRY) Chart for 2013

The chart below is from the NASDAQ. The 12 month daily chart for BlackBerry Stock gives investors a lot of clues as to the problems the stock is facing and why it is hammering so many investors. If you follow volume patterns you can see that in the past year, the majority of investors are trapped at valuations from $15.00 to around $12.50. Yet investors are still trying to pick the bottom in BlackBerry Stock. Over the course of the remainder of this year they have picked up shares at $10.00 right down to $6.40. A lot of investors though are holding stock they bought in 2007 to 2011 and are sitting with enormous losses. Most of these investors could have avoided losses by simply studying the chart pattern of BlackBerry Stock.

BlackBerry Stock 2013 chart

BlackBerry Stock (BBRY) 5 Year Chart

When a stock begins a decline, you want to look back at the history of that stock through its chart before committing capital. The five-year chart of BlackBerry Stock shows the familiar pattern of lower highs since 2009 and if you go back further to include the heyday of summer 2008 when the stock got over $140.00 the chart looks even worse. This pattern of lower highs has been telling investors repeatedly that BlackBerry Stock is dangerous as an investment. The problem though for most investors is that they love to think they are buying the stock at a “great discount” and when it recovers they will be the ones who bought it “on the cheap”.

The problem though is that the stock just keeps falling. So what looked like a great discount is suddenly a great loss as the stock keeps falling and sucking more investors in.

Volume Spike Is A Key Indicator

Another key indicator to look for when studying the long-term chart is a spike in volume which actually failed to push the stock higher. The volume spike late in 2012 and into early 2013 which you can see in the chart below is a great warning indicator to look for. Even the best fund managers can get sucked into a stock. One of my favorite analysts is Laszlo Birinyi and I have written a number of articles about him over the years. But even Mr. Birinyi got sucked into thinking BlackBerry stock was a great buy in November 2011 when he said “It’s been beaten down. It’s a brand, it’s got its fans, and it’s got its products.” ]He also went on to say “I think it is a long shot. These are not widows and orphans stocks, but like we did last year (2011), we want to pick some stocks that have the potential to do well, and aren’t necessarily a portfolio, but they are a good start.”

But buying stocks that look cheap are often that way because they are in serious trouble and that is definitely the case with BlackBerry Stock. The problem though is investors are always drawn to what they think is a great “bargain”. They are not thinking but acting on emotion and that often spells losses.

BlackBerry Stock 5 year chart

When To Consider BlackBerry Stock

For investors interested in profiting from a true recovery in BlackBerry Stock the time to buy will be when the company has consistent growth again. That means revenue and earnings much both improve. When or if that happens, there will be plenty of time to consider buying back into BlackBerry Stock. Until then it is not worth the risk to capital to invest in the stock.

Consider The Multitude Of Stocks

Instead, consider that even if there is a bottom being built at present and investors could get into the stock at what may very well end up being rock-bottom prices, there are a multitude of other stocks with much less risk and very good profit potentials. Indeed for those who like the thrill of the “gamble”, even considering stocks like Facebook Stock or Twitter Stock have better opportunities at present.

Risk to Capital Has To be Considered

When it comes to investing, the risk to capital must be considered. Even if an investor looks at put options on BlackBerry Stock as of noon of Dec 27 2013, there really is no reason to consider selling puts on BlackBerry Stock. The stock is trading for $7.35 and the $6.00 put is basically. 8 cents for 3 weeks of risk. Selling the $7.00 put even for .27 cents offers no protection. Even a put credit spread is still not worth placing in my opinion.

BlackBerry Stock puts for Jan 18 2014

Jan 18 2014 put options expiry as of Dec 27 2013

I have received emails from investors who have lost tens of thousands of dollars of their capital trying to time getting back into BlackBerry Stock. They are desperately trying to recover lost capital and in doing so are continuing to lose even more capital. They need to stop.

BlackBerry Stock Is NOT Investment Grade

Someday BlackBerry Stock may have its day in the sun again and be a great stock to be trading. But as with all stocks, there comes a time when investors must be realistic and realize that some stocks are no longer “investment grade”. BlackBerry Stock at present is no longer investment grade. Investors now need to look elsewhere for profits and stop taking losses on BlackBerry Stock.