Author Topic: Sell ESPP at loss or hold?  (Read 1995 times)

Rockatansky

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Sell ESPP at loss or hold?
« on: December 03, 2015, 08:16:14 AM »
Hi all, first post here and figured I'd make it a good one involving some market timing.

I've been participating in my ESPP for a couple years now and have been selling the stock as soon as it's available. They take deductions for 3 months then purchase and hold for three months. Initially we had the lowest of the beginning or end of the period and now they changed to just the end of the period. Because the market and the company were doing ok there were no problems. Recently though the market tanked, the company had to readjust their 3rd quarter expectations and there is speculation that a retiring VP sold his shares, so the stock never fully recovered with the market. Here is what I have so far:

Purchase 37.81 shares @ $74.2645 = $2808.24 value at time
Received dividend .19 shares @ $81.7665 = $15.54 value at time
Current value 38 shares @ $64 = $2432

Company stock is hovering around $64-65 a share now because of the two issues, so I've been holding onto this for three months now hoping it will eventually break even at least. Now it's only like a $350 loss at the time, but it's kind of disrupted my pipeline of funding other investments, such as prosper/ lending tree and Vanguard Roth IRAs. Should I just keep holding it to see if I'll make the money back or just cut my losses so I can get the money working for me somewhere else instead?

Aphalite

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Re: Sell ESPP at loss or hold?
« Reply #1 on: December 03, 2015, 08:21:19 AM »
If you can't evaluate the economics/fair value of the business, the best thing to do is to not let price anchoring affect your actions in regards to asset allocation

Rockatansky

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Re: Sell ESPP at loss or hold?
« Reply #2 on: December 03, 2015, 08:39:49 AM »
If you can't evaluate the economics/fair value of the business, the best thing to do is to not let price anchoring affect your actions in regards to asset allocation

Well, according to Morningstar http://quotes.morningstar.com/stock/analysis-report?t=0P000004QX&region=usa&culture=en-US&productcode=MLE&nav=no they are undervalued and the actual value would trade over what I paid for it.

Aphalite

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Re: Sell ESPP at loss or hold?
« Reply #3 on: December 03, 2015, 09:01:56 AM »
It probably is undervalued, but my point is that if you had paid $64 for it, you would have sold it already even though it appears to be undervalued from a quick scan of the fundamentals - you're letting price anchoring affect your decision making - ask yourself if you would hold the stock if you had paid, say $40 for it, and Morningstar has a fair value estimate of $200 instead of $78? Would it cause you more heartache if the stock continued to tank? Would it cause you heartache if you sold it and then it took off? For a low margin, cyclical, and sensitive to general economy business like Ryder, you could be waiting for quite a while for the stock to pick back up