THE PERFECT STOCK:

An excerpt from “Prologue”

From the April 18, 2003 price of $5.45/share to its high exactly 52 weeks later of $385/share, Taser would have made an incredible 7065% move. A small $5,000 account invested in Taser would be worth over $380,000 within just 1 year. For the insiders at Taser this would be absolutely the perfect stock. But for the outsiders it would be a far different story.

My involvement with Taser was for less than six weeks. But it would be one of the most rewarding six weeks in my life as a stock  trader. The trading lessons I learned during those six weeks would turn out to be priceless in terms of my success over the rest of my life as a stock trader. It would be some time later that I would understand the true value of the lessons I learned then. I knew that we live in a country where ordinary folks can do extraordinary things. Which is what made America so great. I was going to realize once again that ordinary looking stocks can make extraordinary moves. That is what made the American stock market so great.

An excerpt from “Chapter 16"

Finally, Taser pegged a high of $146.76 on January 27, 2004. And then it started to pull back a little and pegged a low of $121.50 on the 29^th of January. Now Shorty McKenna was ready to make his quick bundle on the stock. All he needed was a clear trade back to a price higher than the prior high of $146.76 and he was going to place his shorts. And the day came on February 2nd as the stock hit a high of $154.08. And he immediately placed his line and went short on 1200 shares. His short sale was offered by his broker to him at a price of $149/share. The stock closed that day at a price of $130.80. Shorty McKenna was ecstatic. He had been dead right and with big money on his short sale.  He felt very confident. He felt the excitement in his stomach. This was great. He had made over $20,000 in one day and it was on the day of his commitment. He felt it in his bones. He could do no wrong. He was right and he was right on the right stock at the right time. In the coming days the stock would go as low as $117.24.  Shorty had seen the stock zoom from $5 about a year ago to now over $150 recently. He felt the drop was coming in a big way. And he would make a bundle. He figured that an upward move from $5 to $150 looked to be setting up at the very least a drop back to well below $100.  He knew from experience, that if the stock went below $100, it would encounter a psychological drop further as for humans $100 is a psychological threshold.  If broken, usually stocks continue downward further at least for the shorter term.  He began salivating.   He could not wait.  Minutes felt like days and days felt like years.

But something strange happened.  Within four days Taser’s prices bounced back. Shorty did not know what was happening. This was all wrong. The stock was supposed to head down and continue heading down. He was getting nervous. But he was convinced that this was a temporary bounce. So he could not let go of his commitment. And he watched his screen in horror. It kept going up rather than down