Penn America Group (PNG)

PNG This should have been a good idea.There had been a tremendous jump in price, followed by six weeks of trading in a very narrow range. Stocks prices often follow this pattern. It's as if they have to rest up from the exertion of the climb, before starting up again. (I hate the way the markets and stocks are anthropomorphized, but talking about them that way seems to provide a natural and useful metaphor.)

What I was totally unprepared for in the case of PNG was the way the price plummeted two days later. It scared the bejesus out of me!

A more dispassionate observation might have been that it stopped careening downward well above the level it had reached at the end of December. But how was anybody to know it wouldn't go even further the next day?

The experience with PNG has made me wary of stocks that have a chart with erratic jumps like this. I find that I avoid stocks that show a lot of volatility, both from day to day and within a day. If the chart looks "messy" all sorts of warning bells go off for me. How irrational is that?