Author Topic: And now for something completely different  (Read 4553 times)

SharperDingaan

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Re: And now for something completely different
« Reply #10 on: March 30, 2009, 05:40:33 AM »

At $50 the stock was a marginal long-term investment.

But ... change the framework & it looks very different.
- Most would sell at $50 & take the quick $20 gain on the short-term investment. The long-term investment then gets reconsidered (wait for more certainty, sell a $50 put to reduce exposure, roll-in over multiple small purchases, etc). The $20 'risk reducing' cushion will not just bias the new decision towards purchase, but also how that purchase will be made.
- The textbook example was the day FFH fell $140+ from manipulative shorting. 50% returns in mere hours was common, & successive short-term rollovers were the norm vs the exception. If you had acted on that day, the hold decision was much easier as there was allready a substantial cash gain in place. It also allowed you to be more objective after the fact.
- Worth noting is that the 'mental accounting' is much stronger when the portfolio is concentrated - making out of the money calls or puts/margin calls more of a requirement (rude recognition that your beloved assumptions are sh*t).

SD

 

 


Broxburnboy

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Re: And now for something completely different
« Reply #11 on: March 30, 2009, 06:30:30 AM »
Sell, take the profit, reinvest in FFH and kiss the ground you're standing on for the opportunity to make money in such an environment.
If the stock responds so volatilely to a news item, it probably isn't a good buy and hold candidate anyway.

ubuy2wron

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Re: And now for something completely different
« Reply #12 on: March 30, 2009, 08:33:49 AM »
The answer to the question is ignore the price and look to the value.

Smazz

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Re: And now for something completely different
« Reply #13 on: March 30, 2009, 11:06:31 AM »
The best time to buy a company is when there are no more questions to be answered.

NumquamPerdo

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Re: And now for something completely different
« Reply #14 on: March 31, 2009, 06:39:53 AM »
Here's what I would do: transfer the stock to your UBS account in Switzerland and sell immediately.  The stock was obviously part of some hedge fund rumour-mongering scheme and the Feds are likely at your doorstep.  Sell your house as soon as is practicable and disassociate yourself from your hedge fund buddies.  Move to Guatemala; the current government is sympathetic towards North American white collar criminals and there is no extradition treaty with the US.  Plus, Guatemalan women are beautiful and love gringos, especially ones with hedge fund cachet.  May God have mercy on your soul.

calonego

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Re: And now for something completely different
« Reply #15 on: April 01, 2009, 12:41:12 PM »
NP - I love it!
next time someone does this, please notify the board of your actions so we can all be involved... I mean, watch from the sidelines...

JC