Author Topic: sell hot stock?  (Read 5802 times)

vivophoenix

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sell hot stock?
« on: September 09, 2014, 08:45:26 AM »
so i bought this really hot stock last week. that has gained at least 20% of its value each day since i bought it.


now im not sure what to do.

do i :

pull out the seed money
pull out the gains only
leave it alone

first of all its not a large amount of money i invest, this isnt my emergency fund and i have already written the money off. that way i can keep my expectations low.

this is more of a hobby/ experiment.


J'onn J'onzz

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Re: sell hot stock?
« Reply #1 on: September 09, 2014, 09:05:09 AM »
If it was me I would take at least a little bit off the table. Hard to say exactly how much without knowing more details but if taking the seek money out does not leave you with a position that is to small to be worth it I would lean that way.

Bob W

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Re: sell hot stock?
« Reply #2 on: September 09, 2014, 09:12:21 AM »
A bird in the hand is worth 2 in the bush.

Now sell that stock and get you some index funds and vanguard.

vivophoenix

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Re: sell hot stock?
« Reply #3 on: September 09, 2014, 09:38:37 AM »
sorry im clueless.

but upon further research it seems in a few days warrants are going to be offered( for $5 per share) , for company B, dependent on the amount of stock i hold in company A.


does that mean i should at least hold on until i am issued my warrant?

viper155

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Re: sell hot stock?
« Reply #4 on: September 09, 2014, 09:48:09 AM »
Usually, the company being bought out makes out the best in these situations. The Buyer usually takes a hit. If this news is already set in stone, it is baked into the price already.....but anything can happen. What you are involved in is no different than gambling in a casino.
If you don't know, really KNOW what you're doing I'd suggest to take the money and run. Put aside 25% or so for taxes. Short term capital gains are taxed at a higher rate than if you held the stock for a year or more. Go to Vanguards website, learn and invest there. Just MHO

vivophoenix

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Re: sell hot stock?
« Reply #5 on: September 09, 2014, 09:52:59 AM »
my ira, and 401k are already in spartan funds

i do not need investment advice for my retirement  or savings.

 i am doing this in general for knowledge about the stock market and personal amusement, and am thus asking from that point of view

vivophoenix

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Re: sell hot stock?
« Reply #6 on: September 09, 2014, 09:55:01 AM »
thanks viper

Dodge

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Re: sell hot stock?
« Reply #7 on: September 10, 2014, 10:05:13 AM »

my ira, and 401k are already in spartan funds

i do not need investment advice for my retirement  or savings.

 i am doing this in general for knowledge about the stock market and personal amusement, and am thus asking from that point of view

What knowledge of the stock market do you expect to gain from this? In my opinion this is like someone expecting to gain knowledge about BlackJack, by throwing money down on the table. Sure you'll learn something, but likely not what you're expecting.

If you want to learn by trading, I suggest opening a demo stock trading account somewhere, so you can learn with fake money. This will also allow you to enter many more positions without worrying about risk, so you can really see what the day-to-day stock movements are like.

That being said, remember this is gambling, not investing. You have a negative expected return on your money.

J'onn J'onzz

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Re: sell hot stock?
« Reply #8 on: September 10, 2014, 11:56:15 AM »

my ira, and 401k are already in spartan funds

i do not need investment advice for my retirement  or savings.

 i am doing this in general for knowledge about the stock market and personal amusement, and am thus asking from that point of view


What knowledge of the stock market do you expect to gain from this? In my opinion this is like someone expecting to gain knowledge about BlackJack, by throwing money down on the table. Sure you'll learn something, but likely not what you're expecting.

If you want to learn by trading, I suggest opening a demo stock trading account somewhere, so you can learn with fake money. This will also allow you to enter many more positions without worrying about risk, so you can really see what the day-to-day stock movements are like.

That being said, remember this is gambling, not investing. You have a negative expected return on your money.

Sorry dodge but just because that it is not your preferred investment strategy does not mean it is gambling or that you have a negative expected return. There are plenty of people that consistently show a profit trading stocks and options instead of just using a buy and hold strategy. Not to say I think it is right for everyone and I surely would not want to do it with my whole portfolio but I always have a small allocation of funds that are for trading. I enjoy it and it is a way to make a little extra.

As far as the fake money accounts go they are not a bad tool IMO but I found that when I tried them out my fills were not really accurate as to what you would get with real money. With that said I was only trading options and not stocks so it could be better if stocks are your focus.

Dodge

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Re: sell hot stock?
« Reply #9 on: September 10, 2014, 12:05:24 PM »
Indeed, the fake money accounts aren't reliable for options, as many options have very low liquidity, or a very large spread (SPX). For "hot stock" type of trading, however, I think it would be fine.

I define gambling as anything you put money into, which has a negative expected return. Is it your assertion that since you know a few people, who over a specific time period have profited from stock trading, that overall it does not have a negative expected return?

Note, I should have clarified a bit. I'm not sure if it's actually a "negative" expected return, as in "you will lose money" but it definitely is negative when compared to indexing. There's a lot of data showing that, but I'm not aware of any data showing the return is negative in real dollars.

J'onn J'onzz

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Re: sell hot stock?
« Reply #10 on: September 10, 2014, 12:23:26 PM »
I took the negative expected return to mean that you would lose money, which is a real possibility when trading, but if you are comparing to indexing then that is a different story.

I also never said I know a few people, just that there are plenty of people in the world that consistently show a profit. To me if there are people that can do it and consistently show a profit year after year then it is no longer gambling and instead it is another style of investing that has a higher risk/reward ratio.

I do agree with you however that for the vast majority of people they will get better returns by indexing over the long run but I still like to have a small allocation for trading. For me the main things is that in bear market year I can make a little extra by selling calls that I can use the premium from to buy more indexes while on sale.

Dodge

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Re: sell hot stock?
« Reply #11 on: September 10, 2014, 12:32:46 PM »

I took the negative expected return to mean that you would lose money, which is a real possibility when trading, but if you are comparing to indexing then that is a different story.

I also never said I know a few people, just that there are plenty of people in the world that consistently show a profit. To me if there are people that can do it and consistently show a profit year after year then it is no longer gambling and instead it is another style of investing that has a higher risk/reward ratio.

I do agree with you however that for the vast majority of people they will get better returns by indexing over the long run but I still like to have a small allocation for trading. For me the main things is that in bear market year I can make a little extra by selling calls that I can use the premium from to buy more indexes while on sale.

Honest question, if I showed you someone who made money consistently from BlackJack (and wasn't counting cards), would you consider that investing?

J'onn J'onzz

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Re: sell hot stock?
« Reply #12 on: September 10, 2014, 12:41:24 PM »
I don't think you can show me that person. Not one that is consistent over a long period of time. The odds are always with the house in BJ so you will consistently be a loser, unless you are counting like you mentioned.

But let me put it another way. If you have a professional poker player that has shown a profit playing each year for the last 20 years. Would you consider the money they take to the table gambling money or investment capital?

in that scenario then yes, I call that investing. Just like I would say investing in any other business venture you may want to go into is investing.


Dodge

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Re: sell hot stock?
« Reply #13 on: September 10, 2014, 01:02:02 PM »
I was consistently profitable in BlackJack for years, without card counting. Still didn't consider it investing. When there are hundreds of millions of people playing the game, you're bound to find some winners, just through random chance.

Poker is different, since you can change the factors of the game, creating a positive expected return.

Looks like we just have a difference in perspective.

vivophoenix

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Re: sell hot stock?
« Reply #14 on: September 11, 2014, 07:14:36 AM »

my ira, and 401k are already in spartan funds

i do not need investment advice for my retirement  or savings.

 i am doing this in general for knowledge about the stock market and personal amusement, and am thus asking from that point of view


That being said, remember this is gambling, not investing. You have a negative expected return on your money.


i thought i did a good job of making it clear that  i was not here to hear the party line about index funds. you can call it gambling or  you can call it investing. either way  im doing it.

anywho, thanks all! i expected a negative return. and gained 50% return :) i will sell today

having said that. i have enjoyed my e



Dodge

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Re: sell hot stock?
« Reply #15 on: September 11, 2014, 07:27:56 AM »


my ira, and 401k are already in spartan funds

i do not need investment advice for my retirement  or savings.

 i am doing this in general for knowledge about the stock market and personal amusement, and am thus asking from that point of view


That being said, remember this is gambling, not investing. You have a negative expected return on your money.


i thought i did a good job of making it clear that  i was not here to hear the party line about index funds. you can call it gambling or  you can call it investing. either way  im doing it.

anywho, thanks all! i expected a negative return. and gained 50% return :) i will sell today

having said that. i have enjoyed my e

This is a public forum, mainly of newbies asking newbie questions. It's important to keep things in perspective for them. Especially since all the people who lost 50% don't make threads talking about it.

Also, I'm currently up 400% in BlackJack :-P

vivophoenix

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Re: sell hot stock?
« Reply #16 on: September 11, 2014, 07:37:11 AM »
:)

jnc

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Re: sell hot stock?
« Reply #17 on: September 12, 2014, 03:45:33 AM »
Congratulations on your gain.

In the future, you can always put in a stop loss order. Let's say the stock is currently trading at $60 and you want to sell if it hits $50, then you put in a stop loss order for $50. If the stock moves much higher, say the stock moves up to $75, you can revisit your stop and raise it higher, say now to $65. That way you can still participate in the upswing and you minimize the downside.

Depending on the stock there may be some volatility during the day which means the price could hit your stop limit and then go back up. In that case you are forced to sell if you put in a stop loss order. You could instead set an alert, i.e you get an email when the stock hits the particular limit and then you go in yourself and decide whether to sell or not.

Hope that helps.


UnleashHell

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Re: sell hot stock?
« Reply #18 on: September 12, 2014, 05:36:49 AM »
tough to answer without knowing the stock, amount invested, why you bought it, the underlying business and your expectations. I do hold individual stocks and I think that on average I put in about 50-100 hours of research into everything I buy. I also put a lot of hours into research of stocks that I don't buy...
I also have long term horizons for my holdings. I haven't actually purchased any stocks for over 6 months as I don't have the cash right now and I'm happy with the holdings I have - even though they have all gone up.

the only advice I would give is that nobody ever went broke taking a profit.....

I have had occasions in the past where I've had a big upwards movement and have then sold some of the stock to take that profit and invest in something else.  I think there has only been one occasion where I bought something and then sold it within a month - and that was a company that had a takeover bid on it a week after I bought it. shares went up 40% and I took all the profit as I liked that company and not the one making the offer.
I've also had occasions where I have invested in a stock and should have sold it sooner (Leham brothers!!)... that kind of thing is the price you pay for getting more educated on the stock buying process... or selling...