The sky is falling!!

[tiedyed1]

I share the frustration on lack of conviction or direction either way lately.

Wrote some weekly covered calls 1-2 weeks ago which has always been one of my standard plays.
A month ago this caused me to get called out with a nice gain on my biotechs and freed up cash but was and still lacking something to buy (as GILD, REGN, and CELG have not pulled back enough for me to be happy re-buying)..
Then over the past two weeks some covered calls on other sectors (insurers and airlines) are ending up being a saving grace as the stock prices are lower than the strike price.
But none of those sectors have been providing me any new strong buying signals lately.

While the BABA, AAPL, and social media stocks keep things exciting I remain focused on my older stalwarts I know best.

While I have been known to take risks, patience and safeties when available are what I am trying to focus on this month.

-Adam


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[riverbabe]

Thank god for TZA today. And Novartis (NVS), still green (ADR). Just took TZA profits of >$3k. When the funds clear (3-day rule), will go TNA again.

[mrmarket]

Wall of worry....wall of worry. Remember the mantra...earnings earnings earnings.

[riverbabe]

Learned a new word today -- "algo-bot" -- what apparently took the market down yesterday.

[mrmarket]

I bought some HOS Dec 34 calls and also bought some LAD March 85 calls...this is candy from babies. What a sucker selloff

[jiesen]

good call on the LAD, $$MM!!! (I should have bought me some, too, but I chickened out)

[Lucavia123]

I think this market has given me whiplash. Where's the volume in this sell-off?

[seabric1]

I figure this is the appropriate thread to post this question: When the sky is falling, when do you decide to sell a stock?

I only read one book on trading Stocks -- William O'Neil's How to Make Money in Stocks. This is pretty much the CANSLIM system and it teaches to sell at a 7% - 8% loss no matter what. The thought is: you picked a stock and guessed wrong, so get out quickly. I really like the CANSLIM philosophy, but for some reason I can't adhere to this rule. What do you folks do?

[mrmarket]

I figure this is the appropriate thread to post this question: When the sky is falling, when do you decide to sell a stock?

I only read one book on trading Stocks -- William O'Neil's How to Make Money in Stocks. This is pretty much the CANSLIM system and it teaches to sell at a 7% - 8% loss no matter what. The thought is: you picked a stock and guessed wrong, so get out quickly. I really like the CANSLIM philosophy, but for some reason I can't adhere to this rule. What do you folks do?

Rule #1 - in the long run, the stock market always goes up.
Rule #2 - buy stocks which outperform the market
Rule #3 - Don't invest money that you need in 10 years.
Rule #4 - Stay diversified

If you stick to the first 4 rules, then....

Rule #5 - You never need to sell when you don't want to.

[Louetta]

Rule #1 - in the long run, the stock market always goes up.
Rule #2 - buy stocks which outperform the market
Rule #3 - Don't invest money that you need in 10 years.
Rule #4 - Stay diversified

If you stick to the first 4 rules, then....

Rule #5 - You never need to sell when you don't want to.

Corollary To Rule #1: The NASDAQ hit its all-time high when I was in high school. I will be thirty in June.
Corollary To Rule #2: In the last century people said what's good for GM is good for America. In this century they filed for bankruptcy protection.
Corollary To Rule #3: Buy a house first.
Corollary To Rule #4: I own a high tech stock, am short bonds, own shipping stocks and a marijuana related stock. On some days recently all these positions have lost money.
Corollary To Rule #5: What you want has nothing to do with it.

[Phoenix7]

Corollary To Rule #1: The NASDAQ hit its all-time high when I was in high school. I will be thirty in June.
Corollary To Rule #2: In the last century people said what's good for GM is good for America. In this century they filed for bankruptcy protection.
Corollary To Rule #3: Buy a house first.
Corollary To Rule #4: I own a high tech stock, am short bonds, own shipping stocks and a marijuana related stock. On some days recently all these positions have lost money.
Corollary To Rule #5: What you want has nothing to do with it.

"Nothing Is Predetermined Or Fore Ordained. Your Mental Attitude i.e., The Way You Think And Feel And Believe Determines Your Destiny" Napoleon Hill

" Every Day, Every Few Hours , See Your Vision Materializing" Sly Stallone

"You Must Always Keep A mental Image Of Your Goal" Chuck Norris

[billyjoe]

I did a backtest using high dividend stocks where all dividends were reinvested over a 5 year time span. It was very profitable not to sell these during market downturns. A similar back test with non dividend paying stocks didn't fare so well. The difference in return was over 70% in favor of the dividend payers. As a result I'm holding a bunch during this correction and selling the non payers.

--------------------billy

[riverbabe]

I did a backtest using high dividend stocks where all dividends were reinvested over a 5 year time span. It was very profitable not to sell these during market downturns. A similar back test with non dividend paying stocks didn't fare so well. The difference in return was over 70% in favor of the dividend payers. As a result I'm holding a bunch during this correction and selling the non payers.

--------------------billy

I'm with you billy. I have owned the high dividend-yield stocks for many years and have no intention of selling them here. I currently have 9 divi stocks of my 14 IRA stocks. Also I have gold, silver and oil (not doing well now, but not too badly) and they still have potential to turn around, depending on the dollar and global issues. Also one non-performing telecom. But am pondering whether to sell them here to raise cash to buy the bottom probably coming in the next 2 weeks. Looking at stocks with the best potential to recover quickly -- AAPL, MGA, POL, R, EA, SKX, etc.

Seabric, as a corollary to "Rule 3" how old are you? Do you have 10 years to wait? If yes, sell your likely under-performers, buy AAPL, INTC, AMZN, GOOG now, put them out of sight and sit on them. FWIW. As for Canslim, there is a MrM thread somewhere here with lots of valuable (um, "questioning") opinions. Most of us here are Canslim vets. (Especially IIC (Doug)).

Louetta, I also am short bonds via a bear ETF (TBT).

[seabric1]

Thank you all for the feedback. Really appreciate it.

I'm 35, own a house, have a separate 401K retirement fund and invest a small amount of money on the side for fun -- a hobby i'm really starting to enjoy actually. I know it's taboo to talk actual dollars, but if for some insane reason i lost everything in my Scottrade account, i would probably drop a few expletives, have a few drinks and then move on with my life. I'm ridiculously conservative with money (i.e. penny pincher). One day i'll probably give the money to my daughter (car, college, wedding, etc).

That said, i HATE losing money... so I want a good strategy to follow. BillyJoe and RiverBabe: your comment on high dividend stocks hit home a bit. I'm starting to really favor stocks that pay.

For example, I took a huge hit with HCLP this month. Bought it at 70 and now it's in the low 40s. However, I didn't sell because the dividend is decent, earnings are great and I think the industry is pretty solid. Excited to see where that one will go 10 years from now. However, if that stock didn't pay a dividend, i'm not sure how i would have reacted.

Where i'm leaning now: For non-dividend stocks, I may follow the canslim method to the letter... try it for a while. For dividend stocks like HCLP, that are maybe going through some short term jitters, i may hold them during down times. Interesting stuff.

[riverbabe]

Seabric, good luck, and may the market gods bless you.