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PPR - Additional Notes on Holding Pocket Pivot Stocks into Earnings

Our recent comments on holding BIDU into earnings also stand for any other pocket pivots we've mentioned recently, such as Amazon.com (AMZN), for instance. If you choose to hold into an earnings announcement, consider your risk vs. the size of your position. For example, if you want to hold a 10% position in XYZ into earnings, and XYZ tanks 20%, it will cost your portfolio 2% overall. IF you want to hold a 20% position you would suffer 4% damage to your portfolio. Frame the problem within parameters of potential risk given the scenarios that could result, and what you are willing to tolerate as potential downside risk. Also consider the worst-case scenario of a drop of 20-30%, which is rare but still always a possiblity. 30% on a 10% position costs you 3% damage to your portfolio, so consider the various potential outcomes in this manner.

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