When Does One Walk Away From A Stock?
Nairametrics|Greed is one of the most repulsive, yet common human trait. It is also an essential quality needed for success as a trader in the stock market. Buffetarian philosophy advices one to be greedy when others are fearful. No one ever states when one should stop being greedy.
I had bought a tranche of United Capital shares at ₦2.45 naira on purely fundamental reasons. The stock peaked sometime this week at ₦3.90 naira per share. Almost 60% profit in six months.Then the stock market turned r and the stock began to drop. While I feel both the pull back and bearish market are momentary, the uncertainty in the economy and country could make them last longer.
Leaving me in a dilemma. Hold or sell? All through today’s trading session, I kept moving my mouse on the sell button. Sell or hold kept ringing in my head. The stock will advance when a dividend announcement is made, but how low will it go till then? Jamb question.
So I went in half way. Sold half of my United Capital at a 45% gain. If the tide turns, I will sell the rest of my United capital shares at a stop price of 3 naira, which gives me a 20% profit. Higher than the yield on six- month treasury bills and the inflation rate. Back to the question: When does one walk away from a stock? That’s another jamb question. I don’t have an answer.