Spatialight (HDTV)

Company. Spatialight is a "leading developer and manufacturer of state-of-the-art high resolution liquid crystal on silicon (LCoS) microdisplay devices for use in High Definition televisions and rear projection monitors. The Company's proprietary SpatiaLight imagEngineT is intended to become the industry standard for the next generation of rear projection display devices, both in terms of price and performance." (company website)

Buy. I bought my first lot of Spatialight shares in November, 2003, as an experiment in the buy the day before a holiday and hold for the rest of the year strategy I had read about. HDTV had just made a big one-day jump from $5 to $6. Woohoo!

According to the strategy, I should have sold the stock again in early January. But the price had fallen a bit and selling right away would have meant taking a small loss. I bought more! After all, buying pressure (green +DI line) was rising, and there had been several days of respectable up-volume.

It soon appeared that I had made a good bet; HDTV reached a new high of $6.32. And that was the beginning of the end, although I certainly didn't realize it at the time.

If I had sold HDTV when it peaked at $6.32, I would have made a small profit. If I had sold HDTV when it peaked again at $6.04, I would have still made a small profit. I was looking at the nice up-days on decent volume. I was looking at the rising green +DI line and rising black ADX line. It might keep going up. Woohoo!

Of course it didn't, and HDTV plunged all the way to $4.40. It recovered again to $5.11, and I could have sold for a tolerable loss. I didn't, and HDTV plunged again all the way to $4.00. It recovered again to $4.69, and hope sprang eternal. HDTV was now above the 200-day moving average (still rising). Perhaps it will still turn out all right.

About this time Spatialight should have been reporting earnings. After all, their fourth quarter and fiscal year had ended on 31-Dec. But there was no news about HDTV earnings. I wrote to Investor Relations at HDTV. "Watch for earnings the week of March 15," they replied. "We actually have 90 days from the end of the fiscal year to report."

Yesterday, Spatialight finally reported its earnings. Well, at least they had some revenue for the year, and they did narrow their loss compared to the previous year and the same quarter of the previous year. And right after the earnings came out, Spatialight issued several announcements about orders against previously announced purchase agreements. It could still turn out all right.

Sell. This morning, HDTV opened up. Yes, it's going to be all right! I'll be rewarded for my persistence. The euphoria was short-lived. HDTV began to move lower, and lower, and lower still.

I bailed out.

This has been the most costly mis-judgment I've made since I began seriously trading after my retirement. I failed to follow my own trading rules, and I failed to appreciate just how speculative this company is. They could be big winners in the high-definition TV market, and they've signed agreements with all the right Asian manufacturers, but they're just not yet ready for prime time.

Several months from now HDTV stock may go through the roof after news that their technology is now used in major lines of HD television sets. When that happens, I'll probably want to slit my wrists for giving up my chance at fortune. I guess I'll just have to take that risk.