When good stock picks go south, it is depressing. It is not only a loss of capital, it is an injury to my stock-picking pride. There are so many factors involved in the free market of what people will pay for stocks, it is difficult at best to choose winners.
These are our options:
- Wait it out – it could take a year
- Sell the stock for a loss and take the hit
- Buy more at the lower price, averaging the share price lower, and hoping for recovery (requires additional capital)
- Trade for a similar stock that is rising (if no hope)
- Take action to climb out of the pit
Climbing out of a pit is tedious at best. Visualize a rock wall climber, looking for the next small support that can support their weight. Sometimes the steps are lateral, sometimes down (yuk!) but often, we hope the steps are higher.
The wall is the stock price. The small support steps are the way out of the pit. The daily range is our reach. The object is to sell at today’s high and buy at today’s low, then repeat the next day.
An example is CNL, June 5 BUY @ $21.29, June 11 SELL @ $21.93. Then June 12 BUY @ $21.65, June 19 SELL @ $22.75. Profit in this example is $0.74, more than the stock rose.
It is a very tricky technique. Be forewarned, you could lose more.
Stocks go down and they go up. Be patient. You are the hunter.
| Recovery | ||||||
| R=Roller | MO=Mkt@Open | |||||
| Symbol | Buy date | -price | Sell date | -price | Loss | |
| AZK | Jan 11-1 | 6.99 | Jan 13=3 | 6.76 | -0.23 | |
| AZK | Jan 21-1 | 6.42 | Jan 27=5 | 6.56 | -0.09 | |
| AZK | ||||||
| * Breakeven |
I’m glad someone has taken the time to go into detail on this subject. All I have seen up to this point is very shallow writings. I can use this.
This is a great article. You make a lot of sense and I agree with many of your views. I don’t disagree with anything you have written, but some of this really has me thinking.
I really like finding internet sites which comprehend the value of furnishing a good resource for absolutely free.
You are excellent with words. I know you worked hard on this article and it shows. I agree with a lot of the content you wrote. I enjoyed this and will be back for more.
Your article is wonderfully authored. I welcome this kind of content. The material here is formatted well and the points made are sound and original. Thanks for making this interesting.
The ideas in this article have given a thoughtful meaning to this subject matter. They are not superficial, but thought out and presented very well.