Yellow Media Inc (TSX: YLO, OTC: YLWPF) hit a new low today, following a downgrade by Credit Suisse to “underperform.” The firm previously had what amounted to a “hold” rating on the stock and has set a new price target of CAD2.

The downgrade and accompanying selloff appear related to growing concerns the previously announced CAD745 million sale of certain Trader Corp unit assets is in trouble. That, in turn, has triggered worries that credit rating agencies would cut Yellow’s rating should the deal fail to “junk,” which would trigger stricter loan covenants. Such action would almost surely force a dividend cut, which at this point is clearly priced in at a 27 percent-plus yield.

To be sure, all this is rumor at this point. To date management has made no statement about the Trader sale beyond its reassuring comments on May 31, which I noted in a Jun. 1 Flash Alert. My position since that time has been to let positions ride, with the understanding that Yellow would go lower if skeptics proved right–and that conservative investors shouldn’t be in the stock.

That remains my position. The bet if you hang on is that Yellow management is going to pull off the asset sale and that second-quarter numbers (the estimated release date is Aug. 5) will beat what are obviously very low investor expectations. The payoff for being right would almost certainly be a sharp recovery, most likely to the CAD4 to CAD5 range initially. The price for being wrong is probably a drop under CAD2, judging from the way investors are treating this stock.

As I’ve written repeatedly over the last couple months, I don’t advise anyone buy more Yellow Media. In fact, if this one is causing you sleepless nights, you shouldn’t own it now. Yellow has long since ceased being an income stock. It’s a speculation that management can meet its operating targets, which it’s always been able to do thus far.

If there’s money that’s burning a hole in your pocket now, consider this: Every Aggressive Holding is now trading below my buy target. That includes Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF), which I’m raising to USD22. So are nine of the Conservative Holdings. Focus on them.

Don’t succumb to emotion and throw more money down what could be a Yellow rat hole. And let your bet ride only if you can stomach the action and absorb the potential loss if management doesn’t succeed.