For last two years, I have been buying stocks when there was a dip, right from BREXIT…etc, but this time I sold entire stock portfolio acting opposite way.
My Reason/guess work for my reverse thinking:
Until Oct 2017, QE money was flowing freely, but FED starting rewinding QE money. This has reduced money flow for MBS and other funding sources that resulted all rates including short term, long term and mortgages. This was what happened in the last two months, directly affects all credit based companies.
Market making a big surprises such as 666, 1000+ are clear indications that Hedge Funds, Mutual funds (and big banks) are shedding away peak reached products.
Mr.Market always makes a surprise move - suddenly - when no one expects it.
Initially, I delayed 2 days selling as I wanted to complete research before calling a sale. This two days dropped my 10% YTD profit to 7%, but I am still happy that I can pay taxes on my profit and still be positive.
I was hesitating to sell my dividend payers, appreciated 70% or above, but finally made a call.
Today, I expected market be positive, but it went down and came back as positive now. I am also confident that i can get back once all the volatility is settled.
Every second, I regret that I didn’t follow your step immediately. By the time, I decide to unwind sCap, it already down by so much… so no action for now… My worry is sCap are all small caps, not like AAPL. Revenue of sCap might decline drastically. AAPL at least have a big cash hoard that… earn interest which would earn more interest if rate goes up… drum roll… many didn’t realize that. In addition, Apple is now paying 10% less tax. More drum roll… also borrow cheap debt, earn higher interest… more and more drum roll… the lady from Black Rock rocks.
It is really hard to decide, but I am used to take such hard decision once a year. That is why I am not a logn term holder like you or wuqijin. Everyone has different comfort and different way of handling.
For your AAPL, it is done deal life term holding.
During the middle I noticed some of your picks are options calls/puts and those are short term and will hit hard.
Appx end of Dec 2017, I moved all my money to profit margin > 10% companies even in SCAPS leaving IRBT, SHOP, TSLA stocks. Rate hikes will hurt bottom lines, but profitable ones will survive than loss making.
The big question is “What if I am proved wrong next week?” I am ready to absorb such as I need to pay tax in 2019 for all my short term gains. It depends on case to case.
Actually less impact than holding shares. For example, holding 1000 shares in UBNT cost $70k, drop 10% becomes lose $7k. If hold LEAPS, say $18k to leverage 1000 shares, only lose $2k.
Long call = Long underlying + Long puts (this mitigate the drop )
That is, instead of holding 1000 shares, I hold 10 LEAPS calls. This is called call replacement, is to reduce risk in case of drastic decline like now. Only hit hard, if I buy $70k worth of LEAPS calls.
To be clear, I didn’t sell in a panic, I’m selling to take advantage of what looks like a correction in the market. I agree you shouldn’t sell in a panic, but when the “experts” say expect things to fall to 22000, I expect people will make it happen when they panic.
But, if I can make even a teensy contribution to what looks like panic, then GREAT. Stock falls = RE falls, and I’ll make way more money if RE falls and I can get in on a dip. Another reason to sell AMZN–a good portion of my stock was there, and I might need it for a down payment.
I have no regrets. It is how I think the game can be played and won. Occasionally you guess wrong and lose. That’s part of playing the game.
Not quite day-trading, but my version of it. And frankly, I’m playing with small enough amounts, it’s not really something to angst over…