A Little Too Greedy

I’ve been buying stocks lately and sticking to my 20% rules. This worked great for Suntrust which has been oscillating up and down, but my other picks have only been going down, so I keep buying more. I bought Google earlier in the year, then again when it dropped 20%, then sold when it went up, then bought some more when it went back down. Then this month it went down even more, so I bought some more at $319 per share. My target sale price was $389 and change, so I dutifully entered a sell order at that price. When the stock market skyrocketed Monday, Google went up to the low 380’s, but not high enough for my order to execute. The next morning before the markets opened, I saw that pre-market trading had Google at $391. Even though a limit order will sell for at least the limit and more if the market supports it, I thought this would be a good chance to up my limit order. I noticed that European stocks were up by about 6% already, so if Google went up 6% from the previous day’s close, it would hit $402. I didn’t want to mess with the $400 barrier, so I changed my sell order to $397 which, on my 3 shares, would only have given me another $24. But sometimes you get big bumps at the start of the trading day, so I hoped for the best.

Google opened about where it was on pre-market trading. In fact it even went up a little. And it managed to get up to $394 before closing down, down, down to $363 on an overall pretty bad day on Wall Street. The next day it was down more, and on Thursday it went below where I had bought this latest round of shares, dropping down to $309.

Not only had I missed an opportunity to sell and lock in a 20% gain, but within 2 days I could have bought the shares back for less than I paid for them, setting myself up for another 20% gain, which I potentially could have reached on Friday after Google had a good earnings report and was up into the 380’s again (not up to my new reduced $391 sell price though).

Warren Buffet this week said that when people get greedy an investor should be fearful and when people get fearful an investor should be greedy. I got a little too greedy this week.