“At least two-thirds of my clients, most of them Abbott retirees, divested their Hospira holdings because Hospira was a new company and they were not certain about it,” said Roch Tranel, president of Tranel Financial Group, a financial planning firm based in Libertyville which has many Abbott retirees as clients. His clients wanted to stick with Abbott (ABT) the parent company.
They didn’t want the new company’s stock, so they sold it. And, while they were doing that, with all of its risks, uncertainties, high hopes, and positive potential, the new company started its life from our perspective as an excellent candidate for a long position.
20/20 hindsight shows us again that this turned out well.
Of course we don’t have 20/20 foresight, so entering one of these trades when lots of other people are heading for the exits can be a pretty stressful thing to do.
The right side of any chart is simply too empty to evoke feelings of calm. Managing whatever your own particular level and style of that kind of discomfort is, is as important as finding the right stock to buy and figuring out a high percentage time to get in. If you were born with a naturally cool head and keen eye for threading your way through uncertainty, count yourself very lucky. Most of need some form of trading stress management routine to keep us calm and clear-eyed enough to “pull the trigger” when the time is right.