Riding Coach on the Roller Coaster

After climbing 900 points Monday, and sitting near that peak Tuesday, the roller coaster turned south once again and the market dropped more than 700 points Wednesday.

I should know better than to go "all in" in this environment.  I guess that is what makes me an amateur when cooler hands are around.

Before all hell broke loose in the last hour of trading on Wednesday, I pulled the plug on my Coach (COH) stock that I had just written up, selling my 280 shares at $17.6142.  I purchased these shares Tuesday at $20.0454, giving me a loss of $2.43/share or 12.1% since purchasing these shares just hours before. Ouch.

My Newell Rubbermaid (NWL) shares were purchased yesterday at $15.20.  They closed Wednesday (still in my account) at $13.87.  They now have incurred a loss of $1.33/share or 8.75%.  This stock, if it holds at this price or moves lower Thursday, shall also be history.

These 8% loss limits are not very helpful in these wild swings of stock prices.  But then what is? Frankly, I do not know what to rate these stocks - Buy? Hold? Sell? I will keep you posted regarding the continued progress or lack thereof in my dealing with the market. 

Disclosure: The author owns NWL.

Comments

[Swiss Investor:]

Why so nervous? You should either buy them and be ready to take some paper losses in the short term or you shouldn't even buy them in the first place. To quote Phil Fisher: If the job has been correctly done when a common stock is purchased, the time to sell is - almost never.

2008 Oct 16 06:10 AM

[notsosmart:]

just hold.forget about them.in time you will be rewarded.suppose they went up those percentages,so what.

2008 Oct 16 03:16 PM

[DaveJ:]

Is this not the stupidest post ever submitted to Seeking Alpha? If you have no clue how to invest then don't, or buy index funds or something. Why they hell to you want to sell a stock because it just got cheaper. Jeez!

2008 Oct 18 11:50 PM

[Robert Free...:]

DaveJ,

I do not think I have written the stupidest post on Seeking Alpha. Perhaps that is your opinion, but I am not sure you have informed all of us about a better strategy.

It is a well-accepted investment strategy, advanced by William O'Neil and his CAN SLIM approach, that limiting one's losses is imperative in developing a profitable portfolio management strategy. It is the implementation of this strategy in the face of a bear market that is so difficult.

My own strategy is to try to drift between 5 and 20 positions in my own portfolio. I have sale points on the upside (partial sales) and sales on the downside (total sales). This strategy is designed to increase my own exposure to equities during favorable market environments and to limit my exposure to equities during corrections. At least that is my hope.

I do not claim to be more than an amateur investor. I blog with transparency of my trading activity and share with my readers my own observations.

Thank you for taking the time to comment on my entry here on Seeking Alpha. You might enjoy (?) reading my blog.

2008 Oct 20 09:32 AM