kowenicki said:
I didn't say it did. Try reading it again and thinking about what I say. Buying shares is a gamble... you get that right? If he has profits he should cash in, as imo the stock will do worse before it does better. If he is already sat on losses then he may aswell ride it out for longer and hope for a return. Seems sensible and logical to me. But what do I know eh....
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I'm not sure what you know, but "didn't say", logical and sensible seem to be concepts you're struggling with. You are clearly not a Vulcan investor.
Our friend Joora is contemplating selling his Nintendo shares as we approach the quarterly report. You said it depends on when he bought them and started talking about things like "losses" and "profit". These are meaningless terms and rooted in emotion and passion, things you want to get rid of when investing. What Joora has right now are Nintendo shares. He doesn't have $13.09 shares or $14.75 shares or $18.10 shares or $32.50 shares. He has shares. What he bought them at is irrelevent. That transaction is over, and today he has Nintendo shares worth $14.76 as of the minute I wrote this - the same as the ones I bought a month ago. Today, Joora and I have the exact same shares and are facing the exact same decision as anyone else who owns them. It doesn't matter how we acquired them. This is fundamental concept that a good investor should adopt. One must let go of the idea that these are shares that were purchased at a certain price as it's meaningless now.
The one thing that Joora and I need to think about is are these shares going to go up or down in value, and when. That's it. If they are going up, you hold, down you sell. Personally, I'm debating whether these shares will see a high before earnings or if the earnings will drive them further up and I'm not sure yet.
However, just to use an example of why your advice is terrible, let's say Joora bought the shares at either $14 or $18. You are anticapating a drop from the current $14.75. For specifics lets say the drop will be to $12. According to your logicless logic Jorra should sell if he bought at $14 but keep if he bought at $18 and sit on it. Let's assume that you think sitting on it is a good idea because you figure it will go higher down the road and maybe get up to $17 or so. So, if we assume we know what is going to happen with the stock (the "gamble" as you say) the best thing to do with the current $14.75 shares is sell now, buy again at $12 and then sell again at $17. Under this scenario these 3 trades will make Joora money no matter what the irrelevant previous purchase price is. It has no impact whatsoever. However, if he took your advice he would miss that trade because he had previously bought higher and take advantage of it if he bought lower. There is no logic there. This train of thought leads to greater losses if you are loosing and greater gains if you are winning but almost always poorly thought out decisions.
