And we're back!
Started by MadImmortalMan, December 21, 2009, 04:32:41 AM
QuoteYou know, every now and then I get this feeling that things are going to go down for a bit any maybe I go go all in cash and watch what happens. Problem is, I usually have some specific plan for when and under what condition I want to sell it before I buy something. Each of my stock positions has some kind of thought behind it like that, and I know that suddenly deciding that things are going down the crapper and dumping it all is a panic move. Like Mojo said--don't trade on emotion.But here's the thing. An example, if you will. I bought CAT at $31.79 back in October as the market was sinking. As you may know, the current price of CAT is at just under $60. And I've been collecting their dividends all year. So, you would think that's good, right?Well, I did have the urge to dump it later in October as it traded down through 28-ish. Not because I didn't like the company, but because I didn't like the overall economy. Sure enough, it went all the way down to $21 or so but I still held on thinking I was smarter than the market. So I still own it today at $59 or whatever it happens to be as of this posting.But was I really smarter than the market? If I had heeded my gut when I didn't like the market, dumped it, and then picked up the same stock, say in April or March for $23 or $25--well I would have lost out on two dividend payments, but I would currently be up six or seven points more than I am.All considered, I think I did all right by holding. But what if the swing was a lot bigger, say like Citi or something. Down to $1 before coming back up, but not to where it was. In that case, I would have been right to dump it and come back in later.I think the difference is the amount of exposure the company in question has to the downfall and what type of downfall it is. Clearly Citi is a lot more exposed to a banking collapse than CAT is, but CAT is not immune.The trouble is, a banking collapse is kinda easy to figure out who will suffer. Banks. Homebuilders, etc. What may be coming up, not so easy.
Quote from: Tamas on December 21, 2009, 05:29:29 AMBy January, I will have enough money which (barely) worth investing. I was thinking some fund, but I am also thinking: why should the bank get most of the profits from stocks? On the other hand, I am not very good in this. Me:
Quote from: Caliga on December 21, 2009, 08:38:56 AMNever buy a stock just because the company puts out a product you (and/or others) like. It's as much, or more, about how well the company manages its finances than what they happen to be producing.That said, I rarely buy a stock if I can't understand what the company is doing in order to make money, and especially if their product is something intangible.
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