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Stocks: When to go short and when to stay long

jpr62902

Jeanclaude Spam Banhammer
SUPER Site Supporter
In November, I bought Eli Lilly at $36.12. It shot up to $41.50 right before Christmas so I sold it at a tidy profit of about 14% in one month. I figured that my short term (after tax) capital gain would be double my gross dividend for the first year, so why not? I also figured it would come back down soon enough since it's an election year. The logic was to buy back in when it does come down and get even more dividends.

Well, it just keeps goin' up and seemingly without any logic to it.

So if you have a 15 or 20 year plan, but the market hands you what looks like a gift of 14% in one month, do you take it, or stay long?

And why?
 

jimbo

Bronze Member
GOLD Site Supporter
My own experience is that the biggest losers in the market are those that will buy only at the bottom and sell only at the top. If your analysis of the stock is that it has no logical reason for increasing in value, then it is time for you to sell.

Just my opinion
 

jpr62902

Jeanclaude Spam Banhammer
SUPER Site Supporter
My own experience is that the biggest losers in the market are those that will buy only at the bottom and sell only at the top. If your analysis of the stock is that it has no logical reason for increasing in value, then it is time for you to sell.

Just my opinion

Those people you are referring to are traders, not investors, right? My question was more toward investors who generally think long term, but are seemingly handed a gift via market emotion over a very short term.

As best as I can tell, LLY was buoyed by: 1. a market rally after the Thanksgiving holiday, and; 2. what looks like unfounded optimism in their Alzheimer's drug that has some serious FDA challenges in its third set of trials.

That said, it's still a blue chip stock with strong financials and dividends, so why do you hold or why do you sell when a 14% profit presents itself? Do you have a metric that tells you to pull the trigger or to hold? My rationale was simply that the short term capital gain was almost triple what the 1st year's dividend would be.
 

Gatorboy

Active member
Just do the opposite of what I do. If I buy, then you should sell, or if I sell, you should buy. If you followed this over the past 10 years, you would be much better off than I.
 

jimbo

Bronze Member
GOLD Site Supporter
Those people you are referring to are traders, not investors, right? My question was more toward investors who generally think long term, but are seemingly handed a gift via market emotion over a very short term.

As best as I can tell, LLY was buoyed by: 1. a market rally after the Thanksgiving holiday, and; 2. what looks like unfounded optimism in their Alzheimer's drug that has some serious FDA challenges in its third set of trials.

That said, it's still a blue chip stock with strong financials and dividends, so why do you hold or why do you sell when a 14% profit presents itself? Do you have a metric that tells you to pull the trigger or to hold? My rationale was simply that the short term capital gain was almost triple what the 1st year's dividend would be.
What I am referring to are those who are afraid to buy because they think the stock might be lower tomorrow, and afraid to sell because they it might be higher it will go higher. There is no way to outguess the market. The best I can do is go with my instinct and gut after analyzing the data available.
 
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