The Day. Let me put that in the middle of a sentence "The Day" so it stands out more. Small stocks, startups, story stocks can sit quiet for years, overlooked, under-appreciated and undervalued. Many, but not all, will have The Day when a press release, a review, an analyst report declares them "found". Until The Day, there's nothing that distinguishes them from the ones that languish forever.

 

On more than a few occasions, I've watched individual stocks rise 140% within a trading session. Sometimes it is more. Usually it is less. But, 140% seems to be the magic range where the stock price pops to and settles when buyers rush in and swamp the typical trading volume. Dendreon (NASDAQ: DNDN) just had such a day.

 

The Day can be described in abstract terms. It can be charted and analyzed. It is definitely welcomed. But there is a very real side to it. Experiencing The Day is personal, emotional, and possibly irrational. It can induce a change in world view. Any such change requires coping strategies.

 

After the market closed on Monday, trading was halted in Dendreon. Guesses, suspicions, conjectures, prevailed as investors prepared themselves for the inevitable news release. There was going to be a press conference Tuesday morning, a half hour before the market opened. The news could signal a pop or a drop. Nobody knew which way or how far.

 

I'll save you the suspense. The stock had risen to about $7 over the previous few days, popped to $24 in the pre-market rush, and eventually settled to $17 for a 130% rise.

 

There were many more stories that day. They played out for each shareholder who was aware of the activity. Some were dramatic. Some were inconsequential. Size matters. Imagine the people with hundreds of thousands of shares. My holding was much smaller. Here's how The Day played for me.

 

My phone got busy right after the trading halt. Friends who also held shares started calling each other and sharing reactions. None of us really knew anything, but those of us who had been through the previous Day in Spring 2007 rummaged through our memories to recall how that played out. We still didn't know anything else, but we remembered how we'd reacted.

 

We considered scenarios in random fashion. Who is putting in stops? At what price? For how many shares? What do you do if it rises? When do you sell? At what price? For how many shares? Should we get together to watch it? Potential parties and support groups get tossed around. There was nothing to do but wait, watch the discussion boards, and check the informal phone tree. Who was willing to be woken up at any hour with news?

 

None of us slept well. I was up every two hours. I wasn't anxious or agitated, but I had a curiosity akin to a Christmas desire to know if I was going to get coal or presents in my stocking. I checked the boards and the news at midnight, fell asleep, woke for my night-time snack at 2AM, fell asleep, unexpectedly woke at 4AM and decided that my subconscious was being silly, so I made a small nightcap to settle any hidden nerves, which meant I slept right past the 6AM conference call. At 6:10AM a dear friend called, woke me up, apologized to find that I hadn't been awake, playfully chastised me, and then told me that the stock was at $24 in pre-market. In the two intervening hours I'd made over three years living expenses.

 

We talked for a while, watched the stock settle, and perused the discussion boards for the analysis of the news. There wasn't any data, but the CEO had expressed confidence that the trial had worked well. For enough men in the study, they'd survived the cancer with negligible side effects. That news sparked the move.

 

We stayed on the phone until the market opened, watched the price jump around, listened to a couple of news reports, and then decided to take a break to continue with the regular morning chores. A half hour later we checked back in, excited, and relieved at the news for humanitarian, personal, and financial reasons.

 

I am retired, or work out of my house, depending on I decide to describe my life; so, I was the one to stay in touch and check in occasionally. I sent out an email to my shareholder friends I hadn't talked to. One was in New Zealand. That would have been a pricey call. Throughout the morning I fielded calls, some were about the stock. Some were just the regular part of life. It was a mix. For those who knew the story, the same questions remained. When do you sell? How much? For those who were suddenly curious, the question was simpler. Is it too late to get in? For some, it didn't even come up in conversation.

 

The trading day ended with me still sitting alone. Breakfast had included four, count them, four strips of bacon as a special treat. Lunch was a homemade feast. I was stuffed. Whenever I make more than $10,000 in a day I treat myself to a $100 present. My mind played with the possibilities, but there was no rush. It was Tuesday and dance night. I don't drink and drive, so I wasn't going to have champagne with my delicious steak dinner. Besides, I decided to save the bottle for when the money shows up in the checking account.

 

I hadn't sold. A 130% jump is sweet, and typical of The Day, but The Day is usually just the beginning of a long unsteady rise. My price target was more like $40, which would give me a year's living expenses from a sale of one position within the stock. I might sell lower though because my checking account is low and my mortgage bill is sitting in the In basket.

 

Describing the entire day would fill a book. For this blog the lesson I want to pass along is simple and powerful. Be prepared for The Day. The celebration is easy to fantasize about, but there are more pragmatic aspects to manage. Emotions, trading strategies, and logistics are a few of the the real aspects of The Day. I knew that it was very unlikely that I would actually do anything with my stock. I had decided on my sell target and the size of the position. Part of that was simple personal finance. Part of that was recognition of my risk tolerance. Others sold. They made a profit. That's a big part of what this is about.

 

The most important thing to have in place is a network of friends who are in a similar situation. It can be hard, and even impolite, to call up someone at work when your news is that you just made two years living expenses before lunch. They might not have the time and they may resent what sounds like a boast. You have to be able to celebrate with someone and talk over the possibilities and implications within your own life. They will help to ground you and may have insights that are blocked from you by emotion.

 

I watched the stock ticker all day. I kept the TV on mute, because I find much of the commentary useless, but I like to know that they are talking about. I spent the day with the laptop on top of my lap. Somewhere in there I went for a walk, after market close. Somewhere in there I made meals and took care of a few small chores. But most of the day's regular activities were ignored. The folks that went to work were massively distracted. Depending on the job, taking the day off can be a good idea.

 

In the end, I am satisfied with the way I spent the day even though nothing really happened. I didn't buy or sell, so my stock holdings remain the same. My portfolio is much healthier, very imbalanced, and I am okay with that. This process is not over, but watching The Day go by is emotionally healthy in the long run. Any significant life event should be recognized and for investors, The Day is such an event. Know yourself and know how you would want to spend such a day. Will it be inconsequential, or will you want to invite over friends for champagne at 9AM? I sit watch, talk, maybe dance a bit, and almost always keep my finger off the sell button.

 

The Day is a celebration akin to the christening of a ship. If all goes well, the boat floats and gets readied for years of long journeys. It is a time to look to the future - and maybe break open a bottle one way or the other.