Rightfully yours

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.