Valeant

Michael Pearson, ex Valeant CEO, enlisted Mr. Ackman’s help to make a bid for Allergan. Armed with information about Valeant’s coming bid for Allergan that other investors did not have, Mr. Ackman spent $3.2 billion buying up Allergan’s shares.

Valeant lost Allergan to Activis. But Mr. Ackman came out a huge winner. He made a $2.6 billion profit.

How about that?!!!!!

Ackman then invested more than $3.2 billion into Valeant at around $190 / share. Valeant shares then flew past $250 each. Ackman looked brilliant.

Greed & fame got him. Instead of taking partial profit and move stops to breakeven. He hoped for a big payday. When a trader gets a home run, he’ll be on TV. All taking-heads talk about him.

When VRX started to drop, what did he do? Hope for VRX to turn around, He bought more. It keeps dropping. Now at $12/share, He can either hold on his shares; It may go to $0/share (bankrupt); or he can buy the whole company.

Hope and greed will destroy any trader even the experience one like Ackman. For him, it doesn’t matter much. He makes money on fees.

When stocks go our way, we become greedy. It will go up more. (It may get to the moon)

When stocks go down, hope gets us. We hope our stocks to go up again. (It may)

Many times, I take profit too soon. My stocks go up without me. I let them go. I’m not going to chase them.

Many times, stocks hit my stops and turn around.

Don’t matter. Next time, I have a better target and stop.

It’s all experience. I’m still in the learning process.

 

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