FFHL, the one stock that I cut loss at 40%

I have lots of thoughts on FFHL ever since last Friday, when the stock went down from 9.1 to 7.1. The ER came out during the session and missed expectation (profit down).

The stock was brought to my attention when it made an astounding run following its impressive IPO on Dec 19, 2006 (from 8 to 18.4 in 7 sessions). I still remember all the speculations on the Internet, mainly from Google finance: "this one is gonna be the next EFUT", well, what happened with EFUT was no coincidence. "The new China plastics Fuwei Films FFHL got score of 96.2 at the Motley Fool with a 111.14% return to date. ", "I picked this up today and think China will be a huge player in LCD screens. This offering will allow Fuwei Films to have one of the most modern manufacturing plants in the world today.") Anyway, I day traded the stocks several time in those days and made some small profits (3%, 5%, etc...). The stock was totally a monster and a newbie like me got all excited buying high selling higher. Not surprisingly, my final round in this festival turned out to be a one way trip when I had to keep 300 stocks bought at an average price of 17.9 after I cannot sell them at a profit (point A). Hehe. Mistake number 1: Day trading turns into an intermediate holding, yet I had no knowledge of the company.

It did not take me long to realize that I made a mistake. Boy, did I try to correct it! I was determined to get out even. How? Day in and day out, I watched this guy hoping the MM behind this one came to a rescue. I did catch the chance, bought at 10.xx and sold at 11.xx (point B to C). And reduced my holdings to 200 shares. But that was like playing fire and I was extremely nervous. I dare not buy too much for the short-term profit and I dare not short it for the fear of the crazy run returns for no reason. Meanwhile, I did my due dilligence searching Chinese Internet to find whatever information I could use to get a sense of how they are doing to deliver their promises. My conclusion was quite pessimistic. I had three reasons: 1. Management team was not credible. Actually, very incredible. 2. Competition is too tough. They are not really cutting edge as they claim to be (which can be seen from the long list of plastic factories and their products and the company's job posting of hiring workers for 500 yuan/month. 3. Huge debt is due soon. No development on the term negotiation with bank. And I began to really hate it and cleared my positions at 10.8 the day before Feburary 27 (point D) . Mistake number 2: Count on the MM's manipulation is really short-sighted. You may succeed once or twice, if you are lucky. But it is not worthy of it considering the risk and the huge psychological burden. Do pay attention to foundamentals and trust the foundamentals will win in the long run.

Must write it down because I sure need to remember it. I sure wish this would be the last time in my investing life that I cut loss at 40%!