Author Topic: Shoot, I Just Stock Picked!  (Read 7925 times)

Shor

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Shoot, I Just Stock Picked!
« on: January 23, 2017, 10:55:25 AM »
Hi there Mustachians!
This thread is for those of you that got drawn in to the world of picking out stocks. Whether that means buying up stocks, trading options, or hoping X event will happen to cause Y to go up/down sideways. Lay out your Mustachian Sins here!

I want to start this thread because I fully intended to head in to 2017 converting my 'fun money' account in to a Vanguard fire-and-forget index account.
But today, I just triggered a stock trade. Oops.

I'm going to lay out the trade, so that you all can laugh / facepunch / trade against me. Perhaps peer pressure and some accountability will make me think twice before I trade again!

Shor

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Re: Shoot, I Just Stock Picked!
« Reply #1 on: January 23, 2017, 11:03:33 AM »
Event:
Qualcomm (QCOM) opened up 7.5 (~12%) points down today on some lawsuit disputes with Apple.

Trade:
Bought 100 QCOM @ $54.91
Sold 1x 65.0 Jan 19 Call @ $2.26
Bought 2x 50.0 Mar 17 Put @ $1.03

Started a position, set down a sell for 1 year later at a 1k profit + dividend,
put covers short term insurance in case of further price depreciation as more news comes out.

bender

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Re: Shoot, I Just Stock Picked!
« Reply #2 on: January 23, 2017, 11:49:27 AM »
Good luck!  Looks like you're up a couple hundred bucks right now as the price is up to $55.79 and you made some on the options.

I think buying the put insurance was not necessary with such a small investment though. 

Can you also keep track of your transaction costs?  Those trades would have cost me about $30 which is more than 0.5%.

Fishfindr

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Re: Shoot, I Just Stock Picked!
« Reply #3 on: January 23, 2017, 11:56:15 AM »
I could be wrong, but you seem to be questioning the decision you made by stock picking vs more risk adverse methods of investment. You can always sell now and put a little change in your pocket and move forward with your pre-determined plans for 2017.

ChpBstrd

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Re: Shoot, I Just Stock Picked!
« Reply #4 on: January 23, 2017, 12:08:21 PM »
If you absolutely have an active trading itch, you could always sell monthly OTM cash-covered puts on a "keeper" ETF until you accidentally buy it on a dip. Then commit to hold.

I have some money to invest, and want to buy VB. I could have just bought it for $130, but instead I sold 4 puts @ $126 and earned an annualized 9% for the next 2 months. This strategy will eventually end up with me being assigned if I repeat it enough, but I can only be assigned at a lower price than I would have paid if I bought it outright - and I keep the option premium to boot.

Yes, there are 2 ways to lose. One is if VB's price runs away. Not as worried about that, because prices/metrics are already high and I can still continue writing puts even as that occurs (or run away). Second is if VB's price collapses far below $126 minus my premium. Yet, even in that event, I'm better off than if I had purchased the shares today.

Obviously, this is not a stunt for taxable accounts. It is a method to deploy cash in an IRA. Returns are in the form of short term capital gains. Buy-n-hold allows one to defer on everything except dividends, so just click buy in your taxable account!

Shor

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Re: Shoot, I Just Stock Picked!
« Reply #5 on: January 23, 2017, 12:43:03 PM »
If you absolutely have an active trading itch, you could always sell monthly OTM cash-covered puts on a "keeper" ETF until you accidentally buy it on a dip. Then commit to hold.

I have some money to invest, and want to buy VB. I could have just bought it for $130, but instead I sold 4 puts @ $126 and earned an annualized 9% for the next 2 months. This strategy will eventually end up with me being assigned if I repeat it enough, but I can only be assigned at a lower price than I would have paid if I bought it outright - and I keep the option premium to boot.

Yes, there are 2 ways to lose. One is if VB's price runs away. Not as worried about that, because prices/metrics are already high and I can still continue writing puts even as that occurs (or run away). Second is if VB's price collapses far below $126 minus my premium. Yet, even in that event, I'm better off than if I had purchased the shares today.

Obviously, this is not a stunt for taxable accounts. It is a method to deploy cash in an IRA. Returns are in the form of short term capital gains. Buy-n-hold allows one to defer on everything except dividends, so just click buy in your taxable account!
Oooh, that's good advice! That would satisfy the market timing itch and at least put the money in to 'that thing I want to eventually have' over time, rather than waiting until I'm totally liquidated.

I could be wrong, but you seem to be questioning the decision you made by stock picking vs more risk adverse methods of investment. You can always sell now and put a little change in your pocket and move forward with your pre-determined plans for 2017.
This is true. But, some people buy cars, other people buy dogs... I buy shares of corporate stock as a hobby..
My 401k and t IRA money is all VTSAX, so I'm not completely out of participation in the general market, but moving the fun money from 'active trading' in to a single index takes more mental triggers than I seem capable of hitting at this moment. So for now, I'm just trying to curb the behavior by forcing it out in to the open like this.

ChpBstrd

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Re: Shoot, I Just Stock Picked!
« Reply #6 on: January 23, 2017, 02:12:15 PM »
If you absolutely have an active trading itch, you could always sell monthly OTM cash-covered puts on a "keeper" ETF until you accidentally buy it on a dip. Then commit to hold.

I have some money to invest, and want to buy VB. I could have just bought it for $130, but instead I sold 4 puts @ $126 and earned an annualized 9% for the next 2 months. This strategy will eventually end up with me being assigned if I repeat it enough, but I can only be assigned at a lower price than I would have paid if I bought it outright - and I keep the option premium to boot.

Yes, there are 2 ways to lose. One is if VB's price runs away. Not as worried about that, because prices/metrics are already high and I can still continue writing puts even as that occurs (or run away). Second is if VB's price collapses far below $126 minus my premium. Yet, even in that event, I'm better off than if I had purchased the shares today.

Obviously, this is not a stunt for taxable accounts. It is a method to deploy cash in an IRA. Returns are in the form of short term capital gains. Buy-n-hold allows one to defer on everything except dividends, so just click buy in your taxable account!
Oooh, that's good advice! That would satisfy the market timing itch and at least put the money in to 'that thing I want to eventually have' over time, rather than waiting until I'm totally liquidated.

I could be wrong, but you seem to be questioning the decision you made by stock picking vs more risk adverse methods of investment. You can always sell now and put a little change in your pocket and move forward with your pre-determined plans for 2017.
This is true. But, some people buy cars, other people buy dogs... I buy shares of corporate stock as a hobby..
My 401k and t IRA money is all VTSAX, so I'm not completely out of participation in the general market, but moving the fun money from 'active trading' in to a single index takes more mental triggers than I seem capable of hitting at this moment. So for now, I'm just trying to curb the behavior by forcing it out in to the open like this.

The trick would be to make a rule binding yourself to never sell the asset or write covered calls on the asset after you have been assigned. Write this rule down on a piece of paper, sign it, and put it somewhere you can find it. You can only "play again" by depositing new money. In this way, you might be able to convert a very costly itch into a savings motivator. After all, your savings rate determines wealth accumulation much more so than defying gravity to earn a couple extra points of ROI. Build a spreadsheet to see the effects, if you haven't already.

The other thing I worry about is executing this low-volatility strategy in an era that by all signs will be marked by trade wars and increasing inflation. Still, I can console myself with the knowledge that the strategy lowers my cost basis even if markets spend the next few years dropping.

theolympians

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Re: Shoot, I Just Stock Picked!
« Reply #7 on: January 25, 2017, 07:25:03 PM »
A number of years ago I purchased Suncor energy (tar sands) hoping the keystone pipeline would be built to transport their oil. I speculated that would massively increase the value of their stock (lol). Waiting.......











Mr Mark

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Re: Shoot, I Just Stock Picked!
« Reply #8 on: January 25, 2017, 11:08:35 PM »
Shor,

I'm totally sympathetic. Active trading and stock picking can be fun, and you seem to be enjoying it!

I often play a bit of texas hold em at my local casino. I really like playing poker and I seem to make a pretty reliable $25/hr on average. Sure, sometimes probability kicks me into a big losing hand, or I just don't play well enough. Meh.

I think the same rules apply to all this fun stuff:
- only do it with a tiny % of your 'stach and even then the remaining 'stach should be sufficient for all your foreseeable needs. This is obviously not an activity for the rent money.
- keep track of your performace against a benchmark. Be honest with yourself. Decide how much underperformace is worth the entertainment element, and if it gets worse than that, stop.
- if you get a string of losses, don't double down or take more and more 'play money' from the 'stach.
- have a strategy, not just blind gambling

Good luck! Over the short term there is a significant chance you will be able to beat the market. Enjoy the ride and keep sharing  - that way we get some vicarious pleasure for free.

Mr. Mark

chasesfish

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Re: Shoot, I Just Stock Picked!
« Reply #9 on: January 26, 2017, 05:14:29 AM »
What percentage of your assets do you own/trade in individual stocks?  Its not inherently wrong, but you need to research and work and decide if its worth your time.  I own mostly individual stocks in my taxable account, but I keep this activity to less than 20% of my portfolio.

Here are the returns below now that I've had the account for five full years.  Last year was a good year, but I'm still not significantly above the S&P on a five year basis.

My Account
1-Year   3-Year   5-Year   
+24.18%   +14.62%   +17.14%

S&P 500 Index    
1 Year         3-Year      5-Year
+11.96%    +8.87%   +14.66%
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beastykato

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Re: Shoot, I Just Stock Picked!
« Reply #10 on: January 26, 2017, 10:19:14 AM »
Hey, no biggie I do it all the time! lol

I actually had Qualcomm on my radar as well, but I never pulled the trigger.  Lack of liquid funds for play investing at the moment.

I find this quite easy, I try to buy entire industries when they are getting all kinda negative hype.  Oil being my most recent cash cow that paid for the new roof on my home last year.

The only time this hasn't worked out for me is with Uranium.  I have been buying into Uranium ever since the Tsunami hit Japan and it's been getting a lot of movement lately with Trump coming into office.  I'm hoping this pays some major dividends in the next decade or so.

Otherwise, I don't find this stock picking thing all that difficult, or I'm just getting lucky.  I never play with more than 5% of my stash though and even then it's usually less.  Definitely think indexing should be the backbone of most people's portfolio.

farmecologist

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Re: Shoot, I Just Stock Picked!
« Reply #11 on: January 26, 2017, 10:33:21 AM »
Full disclosure...I have been 'picking stocks' for a few years now with my 'play money' account that started with $5000.  It is now up to $125,000.  I tend to "bottom feed" on companies that have had very bad news but I feel have a potential to rebound. I enjoy the research, etc...

The biggest success ever came early this year.  Bought $ARIA 3+ years ago after it crashed due to the FDA pulling their drug.  Company has since made a rebound and was just bought out for $24 a share.  Learned a ton about trading, market manipulation via 'money managers', activist investors (Alex Denner), pump & dump tactics, etc.. during this time.  This stock had it all.

I was able to hold the stock until the company was bought out at $24 a share earlier this month. Average share price invested was around $4 a share. I'll admit this was a very risky investment though.

However, the dilemma now is that the account is becoming more than just a small 'play money' account!   Currently holding quite a bit of cash while researching potential leads.

tomatops

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Re: Shoot, I Just Stock Picked!
« Reply #12 on: January 26, 2017, 11:17:42 AM »
I'll be real: I'm a Canadian who just started investing last year and I stock pick from the TSX and index the S&P 500 and International Indices.

I just was never much a fan of the Canadian indices. Very energy and financials heavy.

It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.

Foolish? Probably as last year I did not beat the TSX's amazing return.

But boy oh boy, it can be fun.

tomatops

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Re: Shoot, I Just Stock Picked!
« Reply #13 on: January 26, 2017, 11:18:35 AM »
I'll be real: I'm a Canadian who just started investing last year and I stock pick from the TSX and index invest the S&P 500 and International Indices.

I just was never much a fan of the Canadian indices. Very energy and financials heavy.

It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.

Foolish? Probably as last year I did not beat the TSX's amazing return.

But boy oh boy, it can be fun.

Shor

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Re: Shoot, I Just Stock Picked!
« Reply #14 on: January 26, 2017, 05:48:44 PM »
What percentage of your assets do you own/trade in individual stocks?  Its not inherently wrong, but you need to research and work and decide if its worth your time.  I own mostly individual stocks in my taxable account, but I keep this activity to less than 20% of my portfolio.

Here are the returns below now that I've had the account for five full years.  Last year was a good year, but I'm still not significantly above the S&P on a five year basis.

My Account
1-Year   3-Year   5-Year   
+24.18%   +14.62%   +17.14%

S&P 500 Index    
1 Year         3-Year      5-Year
+11.96%    +8.87%   +14.66%
Wow, those are some impressive returns! I'm really just starting at this stock picking stuff. Is that all done off of realized gains? Single stock picks with a general strategy?

Only about 30k play money heading in to this. 200k other money in the 401k, IRAs and some after tax is all tied to the VTSAX or equivalent. That actually sounds like too much fun money as it is..
Worth my time? Hmm, I wouldn't put a price on my time for reading a book. I have moments of spare time at work. I could read news articles, comment on forums (oh..) or check out stocks. Would you say that if I wanted big gains that I should take this seriously and dedicate serious hours in to analyzing earnings reports? That would definitely require dedicated hours of time.

I'll be real: I'm a Canadian who just started investing last year and I stock pick from the TSX and index the S&P 500 and International Indices.

I just was never much a fan of the Canadian indices. Very energy and financials heavy.

It probably will change going forward - the amount of time and research it takes before making a purchase is becoming overwhelming.

Foolish? Probably as last year I did not beat the TSX's amazing return.

But boy oh boy, it can be fun.
I hear ya, it can be super fun to follow along. Although I'm afraid that I might be falling in to the anchoring bias at times: "I paid $75 for this two weeks ago, so of course it's going to bounce back up!" I can definitely understand wanting to spread the money out so it's not all focused in particular sectors, especially ones that might be heavily disrupted under the wrong conditions.

Shor,

I'm totally sympathetic. Active trading and stock picking can be fun, and you seem to be enjoying it!

I often play a bit of texas hold em at my local casino. I really like playing poker and I seem to make a pretty reliable $25/hr on average. Sure, sometimes probability kicks me into a big losing hand, or I just don't play well enough. Meh.

I think the same rules apply to all this fun stuff:
- only do it with a tiny % of your 'stach and even then the remaining 'stach should be sufficient for all your foreseeable needs. This is obviously not an activity for the rent money.
- keep track of your performace against a benchmark. Be honest with yourself. Decide how much underperformace is worth the entertainment element, and if it gets worse than that, stop.
- if you get a string of losses, don't double down or take more and more 'play money' from the 'stach.
- have a strategy, not just blind gambling

Good luck! Over the short term there is a significant chance you will be able to beat the market. Enjoy the ride and keep sharing  - that way we get some vicarious pleasure for free.
Thanks Mr Mark. I'm pretty sure, at this point in time, I am definitely relying on dumb luck, a good amount of the stache is tied to the market, and I'm not gambling with the rent money, but it's still rolling the dice on factors outside my control.

I heard that for people that are actually good at it, gambling on cards is definitely profitable, and free drinks to boot! ;)
I don't know where my underperformance limit is, that is definitely a bad thing, as right now, there's nothing concrete to keep the fun money separate from the serious money. I might throw more money after bad trades if the cash happens to be available. My plan going forward is to abstain from funding the fun money account any further this year, all extra cash will only go to index funds.

I will keep the sharing going for your pleasure:
Checked my phone about 5 times an hour today. Yesterday QCOM was up just a nudge to 56.85,(with options mostly cancelling out the difference)
 and today it opened down, down 2.85, lower than I had started the position at.

Here are my positions @ purchase price: new price(total difference)
QCOM 100 @ $54.91: $54.05  (-86)
2x Mar 50 P @ $1.03: $0.78   (-50)
-1x Jan 65 C @ $2.26: $1.96  (+30)
Transaction costs: $-30

Well, it looks like today we are down about -$136 in total. The only way those puts will help at all is if the stock drops even further, generally they won't gain a lot of value unless the underlying price trades closer to the strike anyway. As it is, they would only really be worth selling below $51.50.

"Thoughts: if the market sees a huge drop for a stock, then that is probably not the best day to be buying puts with such high volatility priced in." is what I am thinking right now. But thinking back to the day of purchase, the stock had already dropped 12.5%!!! overnight, if it continued to drop further through the day, I would have been kicking myself for not buying the puts and trying to be "smart"

Meanwhile my Smuggy friend "John" is smugly texting me about his awesome Netflix pick of 2016. Damn you John! Dan you and your smuggy face!
I still have at least a month of price bouncing before we see if we want to take further action here.

chasesfish

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Re: Shoot, I Just Stock Picked!
« Reply #15 on: January 27, 2017, 06:00:15 AM »
Those gains are off of an 8-12 stock portfolio in my regular account. 

I'm in the finance industry and the returns this year were much better than average because I bought and subsequently sold banks twice in 2015 when the stock prices went irrational (Oil concerns in January and Brexit in June).  Ironically had I held them longer, I'd be 30% plus, I didn't see the post election rally coming. 

Long-term, if you do the research and buy really good companies, you may be able to beat the indexes by a few percentages.  My debate is my time is worth more than the research and I have to decide how much I enjoy it.  The enjoyment goes in and out.
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WallStreetPhysician

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Re: Shoot, I Just Stock Picked!
« Reply #16 on: January 28, 2017, 04:00:12 AM »
Hi there Mustachians!
This thread is for those of you that got drawn in to the world of picking out stocks. Whether that means buying up stocks, trading options, or hoping X event will happen to cause Y to go up/down sideways. Lay out your Mustachian Sins here!

I want to start this thread because I fully intended to head in to 2017 converting my 'fun money' account in to a Vanguard fire-and-forget index account.
But today, I just triggered a stock trade. Oops.

I'm going to lay out the trade, so that you all can laugh / facepunch / trade against me. Perhaps peer pressure and some accountability will make me think twice before I trade again!

Everyone will trade at one point or another, especially if they are passionate about investing like we are.  I laid out MOD EDIT: Spam link removed. some suggestions if you do choose to trade, but most of all, you should be always trying to quit.  Good luck!
« Last Edit: March 22, 2017, 06:25:18 AM by arebelspy »
Former Wall Street trader turned physician.
Blog: http://www.wallstreetphysician.com/

Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #17 on: January 28, 2017, 05:37:03 AM »
EXAS and KERX. Yes it is a touch of gambling but both companies have products which will revolutionize their sphere of the healthcare industry.

I've lost money in the past on biotechs with promising products that didn't pan out or were stymied by the arbitrary nonsense of the FDA (DVAX being the most galling example).

Trying to wean myself from the thrill of the chase as we become Mustachian.

Mr Mark

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Re: Shoot, I Just Stock Picked!
« Reply #18 on: January 30, 2017, 12:42:29 AM »
Shor,

I'll share my trades too. I also got a little into picking last year after the market double dipped (Feb) and I was a bit disappointed with the index performance in my retirement account. I'm only trading within my IRA to avoid the vast ST capital gains and ordinary dividend exposure I was going to get of course ;-). First time messing with individual stocks since.... ooooh mid 90's.

So far it's working out OK.

*** Disclaimer: This is <<5% of my 'stach. It's play money, OK? YMMV The rest is all in sensible Vanguard index and mutuals, real estate and bonds***

Started by turning 5k of those IRA index funds into cash. Added 2016 contribution of $6500. So had 11.5k to play with. Knew oil could not stay at <$30 for very long and had been watching California Resources Corp [CRC] a while. It had been floated from Oxy at $10/share at end 2014. By early 2016 they'd collapsed to $1 and as I started buying, they headed south.... so I followed it down.

Bought
2/11 2000 CRC @ 0.94 -$1,897
2/16 2000 CRC @ 0.86 -$1,727
2/17 4000 CRC @0.62 -$2,507
2/18 1400 CRC @ 0.60 -$848
2/18 3000 CRC @ 0.60 -$1,803
3/28 1850 CRC @ 1.45 -$2,689

So ended up with 14250 shares at an average cost basis of $0.808 a share (incl commissions).  They then did a 10 -1 reverse split, and there was talk they were waaaay too indebted. As oil rose, CRC went up too, but it was a super volatile ride with huge swings and lots of daily action tusselling between shorts & margin bulls. Got too risky for me, so decided to get my seed money back with a nice return locked in...

6/10 sold 7000 CRC (now 700) @$1.91 ($19.10) +$13,344

Shares started south again on rumours they were insolvent with their bonds trading at 60c to the dollar. Decided to close out of CRC & switch to Prudential as that had a nice dividend yield and looked pretty damn solid to me.

6/27 Sold 7250 CRC (now 725) @$1.495 ($14.95) +$10,833 (so got $1.70 average sale price, more than double investment in about 4 months and tax free - woohoo!)
6/27 Buy 150 PRU @74.56 -$11,191
6/29 Buy 180 PRU @70.94 -$12,776

So now into Prudential with an average share price of $72.67

9/15 +$231 PRU dividend!

Now decided to take some profit on PRU and looked spread it out a bit into a few other higher dividend blue chips, plus take a speculative long term bet on Lithium mining via an Aussie company called Orocobre with a newly commissioned Li brine operation in Argentina .

10/27 Sell 200 PRU @ 83.67 +$16,726
10/27 Buy 200 GIS @ 60.59 -$12,143
10/28 Buy 1700 OROCF @ 2.57 -$4,426

11/30 Sell 130 PRU @100.84 +$13,101
11/30 Buy 200 PFE @31.58 -$6,322
11/30 Buy 170 GSK at 38.89 -$6,618

12/15 +$91 PRU dividend!

Not a bad year. This month, added another $6,500 IRA contribution and diluted the General Mills, as the takeover bid I was hoping for hadn't happened and the stock seemed to be going nowhere. Time for big blue chip Dow Chemical and a nice little care home REIT called National Health Investments

1/20 Sell 100 GIS @ 61.48 +$6,141
1/20 Buy 50 NHI @ 74.19 -$3717
1/20 Buy 150 DOW @ 57.21 -$8588

So, that's where I am right now. All in all I'm very happy with the performance I got (so far) playing in the sandbox. I started with $11,500 in Feb and just added the extra $6,500. So total invested $18k, plus ~$900 of dividends through the year from the IRA mutual funds. Current state is:

150 DOW $9,197
100 GIS $6,272
170 GSK $6,584
50 NHI $3,678
1700 OROCF $6,093
200 PFE $6,284
Cash $1,221

Total $39,329

Now waiting for some dividends from the blue chips to roll in and then we'll see where we go. Hoping to get a bit more of a settled long term hold portfolio now, and look to take the cash balance and coming dividends and buy some more. Probably looking to add to the NHI.

It was a good year - well over a 100% ROI - had a lot of fun making some tax free $!





Mr. Mark

ChpBstrd

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Re: Shoot, I Just Stock Picked!
« Reply #19 on: January 30, 2017, 08:50:51 AM »
A couple of caveats about discussions of stock-picking wins:

1) Most stock pickers chose shares that are more volatile, more leveraged, and/or have a higher beta than the market, e.g. QCOM. So in a rising market like we've enjoyed since 2009, more beta translates to higher returns. That can make stock picking look brilliant, when in fact it is just accepting more risk / market leverage. To illustrate, compare the performance of 2 ETFs, one with the market beta (VTI) and another with a higher than market beta (VB). In a down market, more beta will mean more losses.

2) The selection bias ensures you mostly hear about the winners. Do I bring up my $5,000 loss on gold put options I bought a few years ago? Almost never. It's shameful to me. But I would have told the world had I made $30k on that gamble, as could have been the case. I might even be persuaded that I knew something about the future performance of the asset.

I did, however, tell you about my success selling puts on VB, didn't I?

Shor

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Re: Shoot, I Just Stock Picked!
« Reply #20 on: January 30, 2017, 09:09:06 AM »
A couple of caveats about discussions of stock-picking wins:

1) Most stock pickers chose shares that are more volatile, more leveraged, and/or have a higher beta than the market, e.g. QCOM. So in a rising market like we've enjoyed since 2009, more beta translates to higher returns. That can make stock picking look brilliant, when in fact it is just accepting more risk / market leverage. To illustrate, compare the performance of 2 ETFs, one with the market beta (VTI) and another with a higher than market beta (VB). In a down market, more beta will mean more losses.

2) The selection bias ensures you mostly hear about the winners. Do I bring up my $5,000 loss on gold put options I bought a few years ago? Almost never. It's shameful to me. But I would have told the world had I made $30k on that gamble, as could have been the case. I might even be persuaded that I knew something about the future performance of the asset.

I did, however, tell you about my success selling puts on VB, didn't I?
However, at the onset every pick is a full conviction, sure thing winner. And over time that belief evaporates in the face of crushing reality. Putting it down here, and we can disclose our terrible trades while they still seem like good ideas :D

For sure though, this belief that we can beat the market is usually stemming from the thought that quite possibly, the market can, at times, misprice things and take them too far.
Not to mention there is the one key human factor that brings all of us to the table in the first place: we're bloody bored! :D
Some people want to go zoom zoom, others blow money on an annual vacation, my entertainment is from gambling on stocks.
Coincidentally I also became the partial owner of a multi-billion dollar chip and tech industry... but that's just a perk. It was mostly just boredom.

ChpBstrd

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Re: Shoot, I Just Stock Picked!
« Reply #21 on: January 30, 2017, 10:15:37 AM »
A couple of caveats about discussions of stock-picking wins:

1) Most stock pickers chose shares that are more volatile, more leveraged, and/or have a higher beta than the market, e.g. QCOM. So in a rising market like we've enjoyed since 2009, more beta translates to higher returns. That can make stock picking look brilliant, when in fact it is just accepting more risk / market leverage. To illustrate, compare the performance of 2 ETFs, one with the market beta (VTI) and another with a higher than market beta (VB). In a down market, more beta will mean more losses.

2) The selection bias ensures you mostly hear about the winners. Do I bring up my $5,000 loss on gold put options I bought a few years ago? Almost never. It's shameful to me. But I would have told the world had I made $30k on that gamble, as could have been the case. I might even be persuaded that I knew something about the future performance of the asset.

I did, however, tell you about my success selling puts on VB, didn't I?
However, at the onset every pick is a full conviction, sure thing winner. And over time that belief evaporates in the face of crushing reality. Putting it down here, and we can disclose our terrible trades while they still seem like good ideas :D

For sure though, this belief that we can beat the market is usually stemming from the thought that quite possibly, the market can, at times, misprice things and take them too far.
Not to mention there is the one key human factor that brings all of us to the table in the first place: we're bloody bored! :D
Some people want to go zoom zoom, others blow money on an annual vacation, my entertainment is from gambling on stocks.
Coincidentally I also became the partial owner of a multi-billion dollar chip and tech industry... but that's just a perk. It was mostly just boredom.

I share that insight about boredom. I wish I could find something less destructive to my personal wealth and just sit in index funds like most successful mustachians. But goofing on my cell phone and reading bullshit media stories are all I get when life revolves around work and a small kid.

Unfortunately, paper trading doesn't provide the rush.

The right answer is to probably do some squats and push ups every time I'm tempted to gamble stocks.

Anyway, I'm quitting. Going back and realizing I would already be FI had I just pursued a fully invested buy-n-hold strategy for the past 8 years has made me realize the destructiveness of my ways. Now I have 7-8 years of extra labor thanks to holding cash, market timing, stock picking, and other errors.

Learn from my mistakes and kick the habit. Use cash-secured puts until you  get fully invested, but then buy-n-hold until you add more cash.

Mr Mark

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Re: Shoot, I Just Stock Picked!
« Reply #22 on: January 30, 2017, 11:49:03 PM »
Hmmm. You don't think selling cash covered puts is gambling on stock?
Mr. Mark

ChpBstrd

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Re: Shoot, I Just Stock Picked!
« Reply #23 on: January 31, 2017, 09:04:19 AM »
Hmmm. You don't think selling cash covered puts is gambling on stock?

If you try to make a living at it, yes. It's gambling. That's playing a zero-net game against a computer.

If you have a pile of cash you want to buy-and-hold with, and you want to earn yield while ensuring you eventually buy on a dip, I think it often beats the hell out of a limit order or DCA. Used this way, I wouldn't call it gambling any more than a limit order is gambling.*

*as long as you actually buy-and-hold once you get assigned, instead of succumbing to the gambling urge.

Mr Mark

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Re: Shoot, I Just Stock Picked!
« Reply #24 on: January 31, 2017, 08:59:24 PM »
Hmmm. You don't think selling cash covered puts is gambling on stock?

If you try to make a living at it, yes. It's gambling. That's playing a zero-net game against a computer.

If you have a pile of cash you want to buy-and-hold with, and you want to earn yield while ensuring you eventually buy on a dip, I think it often beats the hell out of a limit order or DCA. Used this way, I wouldn't call it gambling any more than a limit order is gambling.*

*as long as you actually buy-and-hold once you get assigned, instead of succumbing to the gambling urge.

in a bear market you still catch a falling knife just a bit cheaper than a dca plan. In a bull market you never get the stock and miss the gains and the dividends. I think the selling cash covered puts/covered calls strategy only works in a sideways market, no?
Mr. Mark

ChpBstrd

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Re: Shoot, I Just Stock Picked!
« Reply #25 on: February 01, 2017, 12:23:00 PM »
Hmmm. You don't think selling cash covered puts is gambling on stock?

If you try to make a living at it, yes. It's gambling. That's playing a zero-net game against a computer.

If you have a pile of cash you want to buy-and-hold with, and you want to earn yield while ensuring you eventually buy on a dip, I think it often beats the hell out of a limit order or DCA. Used this way, I wouldn't call it gambling any more than a limit order is gambling.*

*as long as you actually buy-and-hold once you get assigned, instead of succumbing to the gambling urge.

in a bear market you still catch a falling knife just a bit cheaper than a dca plan. In a bull market you never get the stock and miss the gains and the dividends. I think the selling cash covered puts/covered calls strategy only works in a sideways market, no?
Depends on your definition of "works".

In a bear market, the writer of cash-covered puts catches the falling knife at a lower cost basis and gets cut less than the person who bought upfront. Depending on timing, the DCO person might do equally well.

In a bull market, the writer of cash-covered puts may underperform the underlying asset. However, s/he also took less risk to do so, as shown above.

For example, you might earn an annualized 9% selling OTM puts in VB each month, but VB often rises at more than 9% per year (last 10 years: 8.2%; last 5 years: 14.85%; last 3 years: 7.05%; not including 1.5% yield). So yes, the strategy is selling some potential upside in return for some definite downside protection. That strikes me as a reasonable alternative to sitting in cash waiting for a dip in this aging bull market with lots of political uncertainty. If the dip never comes, you still earned decent yield while at a lower risk profile.

zazpowered

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Re: Shoot, I Just Stock Picked!
« Reply #26 on: February 01, 2017, 03:25:57 PM »
Full disclosure...I have been 'picking stocks' for a few years now with my 'play money' account that started with $5000.  It is now up to $125,000.  I tend to "bottom feed" on companies that have had very bad news but I feel have a potential to rebound. I enjoy the research, etc...

The biggest success ever came early this year.  Bought $ARIA 3+ years ago after it crashed due to the FDA pulling their drug.  Company has since made a rebound and was just bought out for $24 a share.  Learned a ton about trading, market manipulation via 'money managers', activist investors (Alex Denner), pump & dump tactics, etc.. during this time.  This stock had it all.

I was able to hold the stock until the company was bought out at $24 a share earlier this month. Average share price invested was around $4 a share. I'll admit this was a very risky investment though.

However, the dilemma now is that the account is becoming more than just a small 'play money' account!   Currently holding quite a bit of cash while researching potential leads.

Wait, did you go from 5k to 125k purely from trading or did you add money to it?

lordmetroid

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Re: Shoot, I Just Stock Picked!
« Reply #27 on: February 01, 2017, 04:54:11 PM »
I tried some stock picking a couple of days ago. I sold all four of them and bought back my beloved index. Couldn't keep my hands off and lost 0,7% or even more in the process. Stupid stupid stupid.

farmecologist

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Re: Shoot, I Just Stock Picked!
« Reply #28 on: February 02, 2017, 07:41:49 AM »
Full disclosure...I have been 'picking stocks' for a few years now with my 'play money' account that started with $5000.  It is now up to $125,000.  I tend to "bottom feed" on companies that have had very bad news but I feel have a potential to rebound. I enjoy the research, etc...

The biggest success ever came early this year.  Bought $ARIA 3+ years ago after it crashed due to the FDA pulling their drug.  Company has since made a rebound and was just bought out for $24 a share.  Learned a ton about trading, market manipulation via 'money managers', activist investors (Alex Denner), pump & dump tactics, etc.. during this time.  This stock had it all.

I was able to hold the stock until the company was bought out at $24 a share earlier this month. Average share price invested was around $4 a share. I'll admit this was a very risky investment though.

However, the dilemma now is that the account is becoming more than just a small 'play money' account!   Currently holding quite a bit of cash while researching potential leads.

Wait, did you go from 5k to 125k purely from trading or did you add money to it?

Well quite a few small trades over the years..and a couple big wins.  Like I mentioned above, $ARIA went from $4ish to a $24 buyout over three years.  I had 18K in it at around the low point.  I held the stock the entire time.  Extreme risk of course...and you have to have big time conviction to stick to your guns.  There is no way I could have done it with 'core' funds.  This account started out as 'play money' ( as in 'I'm going to try trading and I don't care what happens to it' money ).  So I was comfortable with the extreme risk.

BTW - 'due dilligence' (i.e. - a LOT of research) is extremely important.  In the case of $ARIA, research was key to being comfortable with holding the stock. The gang over at the investorshub (investorshub.advfn.com/) forums helped with that.  Turned out that Alex Denner ( an activist investor ) took control of the company a couple years ago and the prevailing theory was he was getting the company ready for a buyout.  This turned out to be the case...but it took much longer than expected.


Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #29 on: February 02, 2017, 01:21:35 PM »
Both of my picks (EXAS and KERX) have been on a roll this week. You don't get this kind of excitement with index funds...

Raeon

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Re: Shoot, I Just Stock Picked!
« Reply #30 on: February 02, 2017, 06:27:14 PM »
I threw 3000 at a free robinhood account at the beginning of August just to play around. No frills but the free trades let me play with a tiny amount of cash and not lose it all in fees.

I've lost track of all the small trades I tried but Ive definitely had a couple positives skew my numbers up.

My worst was FLO. Was expecting some recent bakery acquisitions to boost their numbers so I bought the dip. They missed earnings and the dip dipped. Oops. Lost about 200 on that. Since then I've worked on a strategy that seems to be doing decent.

I keep about 10 stocks at a time. I keep 10% free cash. If I see something I want I use the cash, BUT I have to choose what else to sell. This forces me to be realistic about results moving forwards instead of clinging onto something because I don't want to take a loss. Total 6 month gain 13.7%. Sp500 same time frame 5%. Feels good :D

Best winners so far have been...
 CWH @23. Now 32. I like the CEO's way of doing business.
Disney @92 now 110. Solid old blue chip. Bought the dip.
Swks @76 now 90. Internet of things play.

DATA. @42. Just jumped to 55 after hours after doubling earnings expectations. I eyeballed it at 60 when they picked up an old CEO of Amazon Web services, but thought it was a little pricey. Bought the dip, waited a little, and was grinning ear to ear all this afternoon! I think following talented staff can be a legit tactic.

Realistically, it means nothing as this whole account is only 1% of my stache, but it's just plain fun!
Life is short. Happiness is my goal. Self accountability is my tool.

MoonLiteNite

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Re: Shoot, I Just Stock Picked!
« Reply #31 on: February 03, 2017, 04:24:45 AM »
No sins here, i beat the market in my first year in day/swing trading.
22% in 2016 over 33 winning trades and 3 losing trades.

My dumbest mistake though when being trigger happy during my first week. Not following the plane and going with emotion, i quickly saw a RED 2000$ in front of me, and instead of selling like i should have, i kept it for a few days, then weeks. Finally turned green and i sold for a 200$ profit. That was my biggest mistake.

My next set of mistakes is i sell winning trades wayyyyy too early. AMAT, FOLD and MU. I could have more than doubled my money on amat, but i started getting out at 30$ and never got back in, Now 6 months later they are hitting 35, most likely going to 40, but too late to jump on that train.

Raeon

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Re: Shoot, I Just Stock Picked!
« Reply #32 on: February 03, 2017, 06:48:38 AM »
Moonlitenite,
Second guessing your sell timing is only everybody's sin lol. As long as you're doing well, it's better to forget about it. Those could just as well have dipped back down for a loss. I'm personally getting better now at being thankful for my gains, instead of worrying about what could have been.

Most times I've tried staying longer in trades than my gut says, I've regretted it. The way I see it, I only have to be right 60% of the time to keep pace with the benchmark. Best not to stress those rare times where you could have been "more right."
Life is short. Happiness is my goal. Self accountability is my tool.

Mr Mark

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Re: Shoot, I Just Stock Picked!
« Reply #33 on: February 07, 2017, 02:13:48 AM »
11/30 Buy 200 PFE @31.58 -$6,322

PFE went ex-dividend on 2 Feb and I wasn't happy with their lastest earnings report. Earnings are dropping, they're borrowing to buy back stock and pay the 4% dividend, stock trading pretty flat, so decided to exit PFE yesterday on the bump from the buy back announcement and get into a more solid blue chip J&J and use up the residual cash while I was at it.

I should get about $62 in PFE dividend next month.

2/6 Sold 200 PFE @ 32.14 = $6421.84 (taking a profit of $162 incl. dividend in 2 months for an annualised 15% ROI)
2/6 Buy 68 JNJ @ 113.19 = $7703.91

JNJ are a pretty solid company, AAA rated, and with much better earnings and dividend growth. Yes, dividend is a lot lower at 2.7% but I feel the prospects for earnings growth and share price much better than PFE.

:-)
Mr. Mark

Hargrove

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Re: Shoot, I Just Stock Picked!
« Reply #34 on: February 07, 2017, 04:24:36 AM »
It's a fun hobby, but it should probably be mostly a hobby.

I'm a lower-risk spectrum investor, not because I research extensively (I do), but because I do it on mostly blue-chips and stick around for dividends. My down swing isn't 33%, it's 12%. My upswing isn't 33% either, generally, but it is around 20%, and I'm fine with that. I haven't had a downswing that wasn't made even or better by dividends in the same year, and I haven't realized a loss in two years. My lowest current potential loss is only about -.26% in a year. With a long investment horizon, blue-chips are PLENTY volatile. I was up something like 25% on T, down 5-10%, then back up 20%. That was my most volatile.

I managed to invest in Abbot Labs just before they finished their biodegradable heart stent, so when it came, I looked like a winner. Then their buyout issues came and dropped them under my cost, but the approval of St. Jude has pushed them back up again. I'm up about 8% there in under a year, so, not bad, then dividends push it into double digits. Score.

IBM was my biggest win. I read a lot about AI, and IBM appeared to be the sleeper that it seemed only Buffet was betting on. Up 25% since Strategic Imperatives seized the ship, and sweet, sweet dividends. Dividends were also hiked recently.

Ford and InBev are bizarre value plays to me. Ford just hiked dividends a unicorn 33% and the stock is down. "CARS ARE OVER!!!" (record year) "CARS ARE DONE!" (record year). I'm not buying them, but most of America still thinks living 10+ miles from work is reasonable or necessary, and neither employers nor consumers are going out of their way to change that. Even self-driving cars will need companies. The US can convert to driverless cars and lower sales figures, but the rest of the world is still buying cars, too. I wouldn't buy more than one car company, but Ford or GM are pretty easy choices to me.

InBev basically just bought 4/5 of the mainstream beer industry and they're down 12% as they consider buying Coca Cola.

I'm eating up O Realty's doom predictions. This is a company with hilarious amounts of real estate that they're paying off every day, which is required to pay out all the money it makes, which already pays a dividend higher than the retirement withdrawal rule. Hiked dividends 6% this month, like they often do. They make up too much of my "post 65" portfolio before a year or two, but I don't even mind. I love dividend hikes.

(All of these I am invested in, at about 1k each, except O Realty, which is soon to be about 8.5k. The big drawback to this strategy is that US stocks are considered by many "overbought," in that their prices figure in expected future performance to a degree some consider unhealthy and which the Apocalypse NOW, RIGHT NOW guys would go bald over, but I think it's fine. I just wouldn't buy Netflix or Tesla right now - the people looking for the mythical entry point already got in a long time ago, if ever there was one. I buy on dips, almost always see a boost, pocket dividend raises, and am happy floating by around 11% before dividends get hiked again, and blue-chips hike them all the damned time, so I'm happy with the results)
« Last Edit: February 07, 2017, 04:30:08 AM by Hargrove »

thunderball

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Re: Shoot, I Just Stock Picked!
« Reply #35 on: February 07, 2017, 04:41:19 AM »
following (both in interest and the title)...

Mezzie

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Re: Shoot, I Just Stock Picked!
« Reply #36 on: February 07, 2017, 05:57:08 AM »
I have play money that used to be sitting in my personal savings account that I use specifically for stock picking. All the rational investing is boring, so to make sure I do the boring stuff, I've given myself a little excitement. I enjoy it, and I especially enjoy being able to vote on policies of the companies whose stock I hold.

Lately I've been thinking of buying some stock in companies whose practices I hate just to get my voice heard. I realize my few shares make my voice nearly silent, but it's still not as silent as in an index fund.

If I lose all my money in this account, it's fine. If I somehow beat the market, that's of course, fine too. :p
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farmecologist

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Re: Shoot, I Just Stock Picked!
« Reply #37 on: February 07, 2017, 08:36:29 AM »
I have play money that used to be sitting in my personal savings account that I use specifically for stock picking. All the rational investing is boring, so to make sure I do the boring stuff, I've given myself a little excitement. I enjoy it, and I especially enjoy being able to vote on policies of the companies whose stock I hold.

Lately I've been thinking of buying some stock in companies whose practices I hate just to get my voice heard. I realize my few shares make my voice nearly silent, but it's still not as silent as in an index fund.

If I lose all my money in this account, it's fine. If I somehow beat the market, that's of course, fine too. :p


I'm right there with you.  Stock-picking brokerage account is high-risk 'play money'.  Mostly invested in biotechs and such.  It is a fascinating area to research. 



Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #38 on: February 16, 2017, 07:17:12 AM »
As I said before you don't get this kind of excitement with index funds.

Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #39 on: April 02, 2017, 05:42:48 AM »
EXAS continues to climb. This stock has the potential to see $50 to $100 in the not-distant future. I did something very non-Mustachian:  bought some $27 and $30 calls (Jan 2018 and Jan 2019, respectively).


KBecks

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Re: Shoot, I Just Stock Picked!
« Reply #40 on: April 02, 2017, 06:10:21 AM »
I invest in single stocks and options with the help of Motley Fool Pro and Motley Fool Optons subscription services.  I am also dabbling a little bit with their Discovery 2017 collection.

Most of my stuff is in a diversified long term portfolio of individual stocks.  We have a 401k elsewhere that is in funds.  Our goals are conservative and we don't gamble with the money.  And I pay for the professional advice to help me stay on course and learn.  I've got technology, health care, financial, telecom, restaurant and retail.   Then I just committed to trying 9 small-cap stocks, mostly tech, with some fun money on the side.  This will be an interesting little basket to watch, and the idea is to hold all 9 positions for 5 years or more.

But I will tell you, for years, I was putting $XXX a month in the S&P 500, fully funding a ROTH into the S&P or total market index and it worked just fine!  When we were busy with infants and toddlers, auto indexing was a very good friend for our family.  There are many ways to invest.   I am not a natural investor and don't have the time to study intensively so I've hired a reasonably-priced advisory service and it's very fun for me.

Mr Mark

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Re: Shoot, I Just Stock Picked!
« Reply #41 on: April 02, 2017, 09:34:21 AM »
So far the stock picking is going fine. But with the real stash I decided to increase bonds to 30% so just bought a swag of total bond admiral.  #market timing #iconfess
Mr. Mark

PaulMaxime

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Re: Shoot, I Just Stock Picked!
« Reply #42 on: April 02, 2017, 02:00:02 PM »
I invest in single stocks and options with the help of Motley Fool Pro and Motley Fool Optons subscription services.  I am also dabbling a little bit with their Discovery 2017 collection.


Hi KBecks! I'm also a fan of the Motley Fool and use their Pro and Options services and I've just added some small caps to my portfolio with their Discovery 2017 service as well. I don't mind paying them for advice because it's a flat rate vs a percentage of my assets.

Personally, I only use index funds for my 401K and a small Inherited IRA.

I track my performance against the S&P 500 Total Return index so I can see if I'm doing well versus just buying index funds and for the past 10 years I've managed to outperform by around 4% per year. So it can be done. I don't daytrade or time the market. Just buy good companies for the long term and diversify (my largest position is AAPL at about 10% and I have about 50 different stocks).
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Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #43 on: April 27, 2017, 04:54:59 AM »
EXAS reported huge growth in Q1. Early pre-market is quite fun:

Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #44 on: April 27, 2017, 05:22:57 AM »
This one stock is now about 25% of our NW and growing. I know the standard advice to sell some and rebalance but I truly believe this stock is headed to $50+.

Retire-Canada

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Re: Shoot, I Just Stock Picked!
« Reply #45 on: April 27, 2017, 12:40:03 PM »
This one stock is now about 25% of our NW and growing. I know the standard advice to sell some and rebalance but I truly believe this stock is headed to $50+.

That ^^^ sounds like a ridiculous amount of risk unless your NW is very low. I would decide on a max % of NW you'll let your individual stock picks hit [plus a total % for all stock picks combined] and then take the rest of the $$$ and invest in some diversified funds. You can still make lots of $$, but you have also protected most of your NW through diversification.

Pizzabrewer

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Re: Shoot, I Just Stock Picked!
« Reply #46 on: April 27, 2017, 02:47:46 PM »
EXAS closed just over $30 so this was a monster day. I sold some of the calls I was holding and a few hundred shares at a nice profit and will be able to finish funding our 2017 IRAs with the proceeds.

Yes it's still a big chunk of our NW (which was about $205k yesterday, $220k today) but I won't sell more at this point. This stock will double a few more times over the next couple years.

Face punches accepted.
« Last Edit: June 25, 2017, 08:19:47 PM by Pizzabrewer »

EdwardMM

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Re: Shoot, I Just Stock Picked!
« Reply #47 on: April 27, 2017, 08:57:41 PM »
I bought Target (TGT) after their last earnings report tanked the stock. TGT was trading at $66. I bought it at $59.75 on a 10% dip, and it slid another 10%+ down into the 53 range over the following week. (Figures, right?) I'm still holding it.

While I think BAM retail is in trouble, I think Target has a decent change of capitalizing on 1) other major stores closing 2) continual shift away from mall shopping and 3) return of middle class jobs.

Also, they made a huge error taking a strong stand on the bathroom issue (which I've heard the president has admitted internally - they misread the market on it).  But that's starting to blow over. People have a short memory.

Stock is sitting just above $56. I'm hopeful I'll be able to unload it for a modest couple-of-points profit in the next few months. But honestly if the whole thing went to zero it wouldn't be the end of the world. I only bought 80 shares and it represents about 0.33% of my portfolio. Everything else is index funds.

I enjoy trading and figure that on average it's better than blackjack... but just keep it at the hobby level. Anything else is stupid.

Ben Hogan

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Re: Shoot, I Just Stock Picked!
« Reply #48 on: April 28, 2017, 06:55:28 AM »
XOP. to the end of the year.


talltexan

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Re: Shoot, I Just Stock Picked!
« Reply #49 on: April 28, 2017, 08:14:46 AM »
Big week for Alphabet. I bought them a year ago this week when mild earnings caused them to pull back. Currently sitting on 5 shares, not life-changing, but the jump from earnings yesterday made me about $150.

Now that it's long-term capital gains, I'm considering selling.