Buy Low Buy High
Some of the best money I ever lost was when I sold Suntrust last year. I had bought it after Dad said it was probably ripe for a takeover that might increase its price. It had gone down lately, so I bought as many shares as I could with the money I had sitting around in my brokerage account: 19 shares at $77.06. That was in May 2006. It went up slowly but steadily and by the following year was at $90. My goal was to make 20%, so I wouldn't sell until it got to $93.28. Then it started going down. By October I was losing money. In November I decided to sell at a loss, $71.20. I say it was the best money I ever lost because it really started going down after that and every dollar it went down was a dollar I didn't lose.
Despite a steady fall, I decided the mortgage mess was played out and it was time to buy back in again at $47 on June 6. The fall accelerated. Less than 2 weeks later it was down 20%, which instead of selling can be a sign for me to buy more. This has worked well for me with Oracle and Microsoft stock. Then I sell when things go back up and I usually can show a loss on paper by saying I sold the original higher priced shares. Eventually I will have a bigger gain, but it would hopefully be long term at that point. So I bought some more at $36.98. About a month later it fell drastically again and I was down another 20%. Time to buy more, but at this point I'm getting nervous. I bought some more at $29.00 just this week.
It went down a little more, to $25.60, but not enough to buy more (I decided I didn't want any more anyway). Yesterday it sprang back to life very quickly, up 15%. This morning it opened with another big gain. My newest shares had a target sell price of $35.50, so I entered an order to sell at that price. At the time the shares were selling in the high 34's, so it wasn't a lock that the limit would be met and the order would be executed. I checked back about an hour later anyway. I noticed I had too many shares and that my order had gone through at only $34.66. In fact, what I had done earlier was to enter a buy order at $35.50 which had executed immediately and instead of dumping some of this stuff at a better price than 2 days ago, I had just bought my 4th batch. Don't worry, it gets worse.
By this time, calmer heads had prevailed and the stock was on its way down. I quickly calculated the price I would need to sell the shares just to break even (and pay for the $7 commission twice): $35.30. So I put in a sell order at that price, but by this time the shares were down to $33. It gets worse. Around 11 AM, Suntrust was actually below yesterday's closing price of $31.83. Now that mess up was costing me $76. I hung tough, hoping for the best.
It got better. For some reason it was off to the races again and the stock climbed up to 34 again before closing at $34.58. I would have sold at that price and taken the small loss but the network crashed at about 3:30 and I wasn't up and running again until about 4:30, after the market closed. So I never sold the shares, but I hope that I can tomorrow. There were some earnings reports that didn't meet analyst expectations, so tomorrow could be rough, plus with the stock up over 20% in two days, the chances of it going down tomorrow are pretty high.
The lesson here is to be careful. I put some blame on the broker, Scottrade, and their website since it seems like they could warn you that you are entering a limit order that will execute immediately, but they can't make the system idiot-proof either. And I was an idiot today. Also I have to question myself for buying Suntrust again. I think part of it was a desire to buy the stock back for less than I had sold it for and really I should have been happy sitting it out.
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Comments (9)
I had a similar experience in Texas Hold 'em at the BSRC this year. Substitute "stock" for "cards", "broker" for "dealer", "dumping" for "folding", and it's pretty much the same thing.
Posted by Grant | July 18, 2008 9:39 AM
The sell order went through first thing this morning, so I didn't lose anything. Whew! Prices dropped immediately after opening higher, so that was great.
I agree it is all gambling. Fortunately when I buy and sell stocks I'm not playing around with much money. The bulk of my money is invested in less risky mutual funds.
Posted by UT | July 18, 2008 10:34 AM
Well, I finally got Dad's Smuckers in my name and I want to sell. However, I just wonder if I should wait a while? It's been up to $59 in the past 12 months but is now around $45. While it's not that much, really, I just wonder if I should put in an order to sell or wait? It's only $10 to sell + 10 cents a share, so that's $10.40.
Posted by Mom | July 19, 2008 7:08 PM
Sell Smuckers. It is clutter with that crazy tiny check they send you.
Posted by Jeb | July 20, 2008 12:05 PM
Today I was able to sell the shares I meant to sell last week. Bank of America announced less horrible than expected earnings this morning (as good as it gets right now) and so bank stocks were due to get a nice bounce. I changed my sell order from $35.50 to $35.90 (they closed at $34.70 Friday). However Suntrust opened even higher so the trade actually executed at $36.51 only 13 seconds after the opening bell! It reached 37 before falling to 35 by lunchtime. 44 shares left to go.
Posted by UT | July 21, 2008 12:24 PM
Wow. Suntrust has been really crazy the last few days. It was up another 20%, so I sold some more shares at the next target of $45.08 and now have only 22 to go.
Posted by UT | July 23, 2008 3:15 PM
Continued craziness. Suntrust moved around some, almost high enough to sell before going back down a few weeks ago. Then all this stuff about the big banks came out and it went down a little, but skyrocketed yesterday to $60 a share, up 25%. Unfortunately by the time I realized this and tried to enter a sell order, the market was back down to below my sell point ($58.10) and the order didn't go through. I knew I would be in meetings this morning, so I put in a sell order of $59.80 in case there was a big spike in the morning based off of this crazy plan for the government to buy all of the banks' bad loans. And there was: While I was in the meeting the trade executed for $62.75 at about 10 minutes after the opening bell (giving me a 32% gain instead of the 20% I was shooting for). It actually went as high as $64 before being back down at $57.75 now, so I feel like I did great and no longer own Suntrust. The End.
Posted by UT | September 19, 2008 11:34 AM
During Monday's crash after the bailout failed, Suntrust went down into the 40's again. I didn't jump in at 20% below what I had sold my shares at and instead thought that $42 would be okay. I wound up buying somewhere around that price later in the day as it continued to fall. Then it really fell out in the last few minutes to $38.75. I didn't think it would go that low, but now I owned 25 shares. It made some big gains in the next couple of days and I entered a sale price of $50.56 which it just missed yesterday. Then today shares opened lower but Suntrust (and other banks I guess) fought back all day and the sell order went through. It would go as high as $53 today. Then I was going to take that money and put it in Apple which has been way down lately. It was about $101, so I put in an order for $98 thinking there might be a last-minute sell-off. There wasn't and the stock closed at $100.30, so I didn't get any. Maybe tomorrow.
Posted by UT | October 2, 2008 4:15 PM
Since my last comment I have been able to buy shares of Suntrust on the cheap again twice and sell them for a 20% gain. On Oct 9 I bought shares at $36.50 and sold on Oct 14 at $44.57. Even though I was tapped out, I bought some more shares on Oct 23 at $34.80 and breathed a sigh of relief yesterday when I sold them at $42.38. That's six round trips I've made in this stock. I wish all my investments worked out so well. I've also bought Intel, Dell, Google, and Apple lately but all of them are staying in a narrower range than crazy Suntrust.
Posted by UT | November 5, 2008 9:31 PM