So I had a little bit of cash a couple of years ago. Not a fortune, basically enough to pay the mortgage for half a month. Did a little research on Fidelity’s website, picked sectors pretty much at random, found a couple of stocks I’d never heard of that seemed to have one or two analysts say they were maybe OK, and bought them.
One got bought out by a private equity firm about 18 months later. I made a couple hundred dollars on it, which was nice.
The other just sorta sat there for a while. Then started going crazy including two 2-for-one splits. At present it’s worth 3x what I paid for it. Which is of course nice, though I naturally wish I’d been bolder and invested most of our life’s savings in it
So what to do now?
Let the money ride?
Leave it and invest more?
Sell it all and pay the mortgage for an entire month?
Sell enough of it to cover my initial investment and let the rest ride?
Again, this isn’t a huge amount of money and the whole thing could lose all its value and it wouldn’t be a huge financial hit. So no opinions should be construed as posing any risk to our finances whatsoever even if the advice is “sell it for cash, take the cash, and use it for kindling”.
I could swear I once read some flip bit of advice along the lines of “if it drops 20%, sell half of your holdings, if it rises 20%, buy half” or maybe it was the other way around, or maybe it was “starve a cold, feed a fever” or something.
Er, on hindsight, I guess that coin would have to have 4 sides. Anyone know of a country that uses tetrahedons for coins?
Mortgage payment for half a month? Wow, tough call. You must be losing sleep.
I’d do some research and try to figure out where the stock’s heading. I’d approach the situation logically instead of relying on old investment sayings and advice from morons like me.
First, do your research on the stock. Ask yourself two questions:
Do you understand their business well enough to explain their business to yourself?
Would you buy this stock today – or run away from it?
If so, I suggest selling half your holdings to take down profits, and let the rest ride. (I just did this with a stock I hold.) Then do your research and find another good company to put the money into.
I know you’re kidding, but it only takes two coin tosses. Heads=1 and 2, Tails=3 and 4. The second toss makes the choice. You could use one die, and throw again if you get a 5 or 6.
Now that I got that silliness out of the way, here’s a little lump of advice (add grains of salt to taste.) How much did you hope to make on your stock when you bought it? If you have reached that goal, selling is a sound idea.
If you have a little more time, you can do some research. Your local library probably has a Value Line subscription. You can probably find a full page of details about your stock. If it seems like gibberish, ask the reference librarian to explain it.
I’m assuming we’re talking about less than like $3,000? Honestly, I would just cash it out and put it into your savings account and not give it another thought. Unless the whole stock-picking game is a fun hobby for you, it doesn’t seem worth the effort.
Your post is a bit confusing. Did you buy specific stocks, or Fidelity Funds.
It sounds like, if you want to continue to invest in the equity makrket (which is a good idea for most people), you need to learn some basics and set some goals. Successful nvesting is a long term affair and you need to set goals that fit your situation. Frequent buying and selling has a cost and, especially, selling on a significant uptick is often unwise. It’s called profit taking, and has a place, but usually not in the context you’re describing. You should learn about your specific stocks, or funds, and continue to keep abreast of changes in them. As long as they fit your goals it’s best to stick w/ them and not jump around, or in and out of the market.
I’d hope it was the other way around. If you tend to buy after something has risen and sell after it’s fallen, you’re going to lose a lot more money than if you just bought and sold completely randomly.
Been away all day - didn’t mean to post and ignore all the very informative responses.
Quite true! I think the theory (if “sell at 20% drop” was the saying) was that you’d reduce your exposure to loss while still holding and hoping for a rebound. In any case I haven’t done it that way. Yet, heh.
Sorry - I used the tools on the Fidelity website to do research, then purchased specific stocks based on what I read. We do have quite a bit of our retirement money in mutual funds, and have several individual stocks that we’ve owned literally our entire lives (gifted to my spouse and myself by family members as babies, and left in reinvestment through sheer inertia). The money referred to in the first post was our first effort to really try to research and make picks on our own. And - quite by accident (so it seems) we did well. While we’re not tremendously knowledgeable, we know there are things like P/E ratios and lots of other figures that a more serious investor would do well to study. I’m not sure we have the stomach or risk tolerance to take this into the big leagues! The money in question was money we could afford to lose.
“Profit taking” not in this context? Not sure why it wouldn’t be appropriate - it would seem that if we had the urge to become active traders we certainly would, while if we’re the buy, hold, forget type we should hang onto it? Is that what you meant? Of course, clearly we are the buy/hold/forget types as shown by the stuff we’ve owned since toddlerhood
“How much.”? Uh, “some”? Seriously - I had no mental goals in sight, beyond “follow some advice, invest in a sector we don’t already have exposure in, close my eyes, and hope for the best”. I guess I’m not ready to take over at Merrill Lynch just yet, huh? Clearly though this one particular stock has rather startled me, hence the question. I will do some research as you suggest - the Fidelity website has a lot of good research available.
It isn’t, but possibly it should be - we’re looking at needing to build up a fairly substantial nest-egg to help support Dweezil (not to mention ourselves) and if we can do more in the stock market in the long term, that would help.
Uh, no, it’s an industry I know little about, and it’s in another country… in an attempt to diversify; our portfolio is US-heavy and this was a totally different sector, which is why I went in that direction. 2. Glancing at the analyst comments today, I might well invest in it today.
What it all boils down to, I think, is that I’m not naturally inclined to be hands-on about our investments (and this has bitten us on the tail; for example we had some Lucent stock back when, derived from the AT&T gifted when Typo Knig was a wee misspelling, and we sat on it while it plummeted). And we also aren’t gamblers by nature… for example in my 3 trips to a casino, I lost my token 20 bucks in the slots the first time, won 40 dollars the second time and quit, and the third time I wandered through the slots, decided it was noisy and stinky and I didn’t like it and I left. Sound familiar? You know, don’t trust the good luck, quit while you’re ahead, and don’t throw any more away on such foolishness
You guys have given me a lot to think about! And it’s obviously about more than this one small-potatoes investment, it’s more of a long-term change in mindset that we have to make (or not make).
Lunar Saltlick: sensible advice, succinctly put. You’re no more a moron than I am! (um, or something :))
