Dilution is killing me...anyone else?

[yoyomama]

First ETFC, then F & now FIG.

I'm a newbie & getting clobbered...it's like they see me coming.

I don't care that this is a way for them to raise capital...it totally screws the people who are already shareholders. Do any of these companies ever get back up to where they were before they diluted the share pool?

I didn't have the patience to stick it out with ETFC & F and am contemplating what to do about FIG as we speak. Probably just take my licking & move on.

[LemonButt]

F is volatile enough you could probably at least break even if you wait it out. The stock jumps when the wind blows it seems. Almost everyone lost some money today with stocks retreating--mostly on low volume across the board. I averaged down a stock I'm in (PSEC) today and only need a small gain to break even now. You basically need to be doing the exact opposite of what everyone else is doing When everyone is selling and pushing the stock down, buy low. When everyone is buying and pushing the stock up, sell high--unless of course your in a stock like GM or something.

I wouldn't touch a stock unless the company is 1: profitable during this downturn (no automakers), 2: undervalued in terms of assets per share compared to share price, and 3: insider buying in the past month when stocks hit lows. It's clear to see the logic behind why I'd set those parameters for initial screening of stocks. Using the MSN Money screener, top four results were:

PRLS @ $1.88/share ($2.62 in assets, over 1 million insider shares bought)
HALL @ $6.50/share ($8.61 in assets, over 400k insider shares bought)
HBRF @ $3.20/share ($3.83 in assets, over 400k insider shares bought)
QDHC @ $6.20/share ($12.73 in assets, over 250k insider shares bought)

QDHC looks the best considering the delta there, but it looks like their profit margins are down at first glance. I'm long on PSEC and its the #7 stock on the list at $9.50/share with $14.19 in assets with 82k insider shares bought. It's also got a 17% yield, so even if I lose 10% on the stock, I'll end up breaking even after paying a 7% margin fee.

The secret to success when you're a newbie is to not beat yourself and look in hindsight. If you buy a stock at $10 and it goes to $11 and you don't sell because you want $11.01 and so on, you'll end up holding it until it goes in the red and sell in a panic to minimize your losses. The hardest part of actively trading without losing your shirt is understanding that you don't lose money until you sell a stock.

If a stock is in the red, you shouldn't sell it unless it's going down on high volume and then you've got issues. If you're looking to get some quick gains, find the stocks that are up on high volume in the morning and buy, then wait for the momentum to take it higher during the day and sell in the afternoon for a quick couple percent gain. It's better to buy on strength than on weakness if you're looking for returns on a daily basis. When stocks go down significantly (like most did today) on low volume, it's because few are buying and few are selling, so you have more volatility and higher spreads.

When I started trading many years ago I didn't realize the importance of volume on the price of a stock and what it means. If you look at the 1 year chart of F with volume on it, you'll see the stock went up on high volume, but once it topped out there was very low volume, and then down on very very high volume. You can also see the average volume is around 100 million currently, but until they went in the crapper the volume was rarely over 100 million much less averaging 100 million, thus the latest spell of volatility. How much do you have in F? If it's a relatively small amount, I'd let it ride and put a limit order to sell at a break even point or +5% and just ignore it unless they start talking bankruptcy. Otherwise you could cut your losses and buy some STAR if you're looking for a quick recovery

[steelman]

F is volatile enough you could probably at least break even if you wait it out. The stock jumps when the wind blows it seems. Almost everyone lost some money today with stocks retreating--mostly on low volume across the board. I averaged down a stock I'm in (PSEC) today and only need a small gain to break even now. You basically need to be doing the exact opposite of what everyone else is doing When everyone is selling and pushing the stock down, buy low. When everyone is buying and pushing the stock up, sell high--unless of course your in a stock like GM or something.

I wouldn't touch a stock unless the company is 1: profitable during this downturn (no automakers), 2: undervalued in terms of assets per share compared to share price, and 3: insider buying in the past month when stocks hit lows. It's clear to see the logic behind why I'd set those parameters for initial screening of stocks. Using the MSN Money screener, top four results were:

PRLS @ $1.88/share ($2.62 in assets, over 1 million insider shares bought)
HALL @ $6.50/share ($8.61 in assets, over 400k insider shares bought)
HBRF @ $3.20/share ($3.83 in assets, over 400k insider shares bought)
QDHC @ $6.20/share ($12.73 in assets, over 250k insider shares bought)

QDHC looks the best considering the delta there, but it looks like their profit margins are down at first glance. I'm long on PSEC and its the #7 stock on the list at $9.50/share with $14.19 in assets with 82k insider shares bought. It's also got a 17% yield, so even if I lose 10% on the stock, I'll end up breaking even after paying a 7% margin fee.

The secret to success when you're a newbie is to not beat yourself and look in hindsight. If you buy a stock at $10 and it goes to $11 and you don't sell because you want $11.01 and so on, you'll end up holding it until it goes in the red and sell in a panic to minimize your losses. The hardest part of actively trading without losing your shirt is understanding that you don't lose money until you sell a stock.

If a stock is in the red, you shouldn't sell it unless it's going down on high volume and then you've got issues. If you're looking to get some quick gains, find the stocks that are up on high volume in the morning and buy, then wait for the momentum to take it higher during the day and sell in the afternoon for a quick couple percent gain. It's better to buy on strength than on weakness if you're looking for returns on a daily basis. When stocks go down significantly (like most did today) on low volume, it's because few are buying and few are selling, so you have more volatility and higher spreads.

When I started trading many years ago I didn't realize the importance of volume on the price of a stock and what it means. If you look at the 1 year chart of F with volume on it, you'll see the stock went up on high volume, but once it topped out there was very low volume, and then down on very very high volume. You can also see the average volume is around 100 million currently, but until they went in the crapper the volume was rarely over 100 million much less averaging 100 million, thus the latest spell of volatility. How much do you have in F? If it's a relatively small amount, I'd let it ride and put a limit order to sell at a break even point or +5% and just ignore it unless they start talking bankruptcy. Otherwise you could cut your losses and buy some STAR if you're looking for a quick recovery

LemonButt,
Thanks for the explanation. I am a newbie as well. I like the explanation of being undervalued; assets per share versus price per share. I did catch C at $1 and sold at $2.80 and AIG at .38 and still holding. Bought and Sold EBIX with $$$MM$$$ and the gang and currently long with STAR. However I started trading in November with 5 buys, Dogs of the Dow-C, BAC, PFE, AA, GE. So I started down 50% after about a month or so, but climbing back. Welcome, there's are many great thinkers here. How do you determine the assets price per share?
Steelman

[LemonButt]

When I say assets, I mean net assets which means equity (net worth). Equity = Assets - Liabilities in accounting lingo. If a company has $15 in assets per share and a share price of $10, that means if the company liquidated all of their assets at fair value then shareholders would recieve $15/share. A profitable company will add to their net assets where as a company like GM that eats up cash (an asset) will lose value. Obviously a stock with more assets than it's current share price that is profitable and increasing that asset/share ratio is a good thing

[LemonButt]

Dilution rears its ugly head once more. My pick for portfolio of the week, MWE, was up from 18.07 to 19.95 and they announced they are offering 2.9 million more shares today...sigh.