Maybe my perspective is too long - I can recall when a stock moved on how its quarter earnings compared to the prior year. I even can recall when quarters weren't important, just year-to-year changes.
I can understand the recent move of STX in tandem with WDC over their extremely strong earnings quarter. What baffles me is this morning's $1.50 down move based on earnings that were only up 892% for the quarter year over year against the analyst estimates of 929%.
Almost by definition, the analyst estimates will differ from company estimates, and they are working on numbers fed to them from the company. Individual analyst estimates are all over the map, so they are aggregated into an "average", similar to a shotgun blast in the general direction of the target "averaging" a bulls-eye.
I'm a long-term bull on STX, but the short term is driving me crazy....
Exactly. The long term trend of the market and a lot of companies is up when looked at over decades/years. I have always done well buying or adding on dips of 10% or so from a previously established level.
Also, the key to successful investing is patience and keeping your eye on the company's fundamentals. A good book to read is Einhorn's "Fooling some of the people all of the time" because it details how wrong the market can be for quite a long time and you have to have the patience to ride out the irrationality.
Anyway, it is funny but some of my best investments were ones that initially went down and I added to my position before they skyrocketed in value (where the fundamentals didn't change).
A solid rebound in price over the day. That shows technical strength. $30 price has been a resistance level so it might consolidate around here.
I ended up selling my options today when the stock rebounded back to $29.50 (still long stock). It wasn't that STX is overvalued but I'm worried that the market is going to be disappointed in this week's central bank news and will sell off later this week. I hope I'm wrong.
I didn't say to ignore the fluctuations, I said your were calculating your return on investment incorrectly if you used current stock price. Your investment (your money that you took out of YOUR pocket) is the only basis you should use in computing return at any point in time. I could sell my stock and make a nice gain, but to do as good with the "new" money, I would have to find a stock that was paying out 8+%
"when the price goes down, you are losing money" Please explain how this works! They hedges and shorts just love investors and traders who think like this.
OK.... even though you have not realized a loss for tax purposes, when the price goes down, you are losing money. Look at the people who bought Radio Shack at $6.00 for the dividend. At some point it is only smart to realize the loss and move what is left of your money somewhere else. When I started the thread this morning, STX was down $2.50 and it wound up only down $0.50. I am glad some people came to their senses and bid the price back up, there was still a loss in the morning. It can't be ignored just because the stock has not been sold.
Going forward this stock will slowly be less volatile each quarter. When it is a small company among many in a very price competitive market, the stock fluctuates greatly. But as it grows into an S&P 500 stable company, and it slowly acquires more and more competitors, and it has a solid dividend at a reasonable payout level, the stock will become less volatile. I think the volatility right now mainly has to do with the swings the company used to take before two companies owned 90% of the market, and until investors realize those days are gone, it will continue to be very volatile.
Here's some advice I read somewhere that helps me ignore the short term bullcrap. It applies more to investing than to trading.
Write down your thesis for owning the stock. If none of the assumptions underlying your thesis have changed, don't trade it other than to possible buy some more on dips. If something changes in your thesis, start looking to lighten up. This process simply allows you to remind your future self what the heck you are doing with this trade.
Or, just turn off your computer.
That is very good advice. Part of my frustration is forgetting what my thinking was when I bought the stock. I do enjoy the trading and the ups and downs, but I also like to be right and it is too easy to remember the ones I got right and forget the others.