No. of Recommendations: 3

Watching RSH surge over the last few weeks has been pure agony -- even more so because I thought about closing the short at a profit when RSH was trading below $2, but didn't do it.

The idea behind shorting was to go long the Tier 1 companies, and then short some of their weakest competitors that are having their business models completely disrupted. But as you mentioned,

even a loser can get a lifeline, offer, bid (whatever you might call it) from someone which saves them from a slow certain death

You're right, and I mentioned this risk in the RSH short recommendation, although that provides me no comfort today. At this point, I'm maintaining the short in order to see RSH's earnings on Feb 18. If things are as ugly as I think, the stock could sell off sharply. But it is also possible that even if RSH severely misses earnings, the stock could rise further on optimistic guidance, buyout rumors, etc.

Tony, I allocated only a 1% position to the RSH short because of these risks. And recently, I have come to the conclusion that if I'm not comfortable allocating a larger percentage of Tier 1's capital to a position, then it's probably not worth allocating any money to that position. That's because there are now seven Tier 1 businesses (and more on the way) that I'm perfectly comfortable allocating 5+% to, and those are the businesses that I should be spending most of my time on because that's where Tier 1's outperformance will be earned, and those are the stocks that will allow me to help members like you achieve your financial goals.

And because of that, I will likely be closing the RSH short in the next few weeks or months -- hopefully at a profit. If that is not possible, then I will accept Tier 1's first losing position, apologize for the mistake, and apply the lessons learned to improve my process in the future.


Joe T
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