Message Font: Serif | Sans-Serif
No. of Recommendations: 14
100% of the time you will be able to pick times that you could have bought or sold at perfect levels. There is no sense in regretting that you didn't act on those prices, seen as highs with perfect hindsight.

Absolutely agree! Buying absolute bottoms and selling absolute tops is absolutely impossible except for rare instances of sheer luck.

That move from $120-150k was a quick one.

Yes, it was, which brings me to a rule I believe in more then ever which is TO ALWAYS SELL PARABOLIC MOVES AND NEVER BUY THEM EVEN IF YOU THINK THE VALUATION IS REASONABLE. Parabolic moves almost never hold. They almost always retrace. What do I mean by parabolic move? Well, we don't need to get super particular here with exact numbers to the decimal point. Very simply, it is a high percentage return in a short period of time. Clearly, Berkshire going from 3600 to 5000 from Aug 07 to Dec 07 was a parabolic move. Too much too fast. Was it overvalued at 5K? I really don't think so. Doesn't matter. It was too much too quick, and therefore should be sold. I didn't nail the top, but I posted in real time that I sold at 4600 and I outlined this exact specific reason why. Too bad I didn't follow the same logic with respect to my commodity and energy stocks in May-June 08.

IMO, I've concluded if you've got something that is up 50%+ in under 6 months, forget if the valuation is reasonable or undervalued or if you can make a case for it going even higher. Just automatically sell at least half. Chances are, 95%+ of the time the market will give you an opportunity to buy back in to the name much lower then your sell price if you are just patient.

BTW, bought some back at 3800 and Thursday at 3300. If by some chance the stock is able to move quickly to 5000 for whatever reason in the next 6-12 months, I'll be a seller even though I think 5000 is still undervalued. Odds are I'll get a chance to buy back under 4K again.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.