When I checked my Scottrade account this morning, I saw I was down $50. Gasp! Choke! Panic in the streets! Dogs and cats, living together! Sackcloth, ashes, we all fall down! Why, God, why?
When I saw my portfolio making $50 and $100 gains on some recent days, I knew it couldn't go on forever any more than a tossed coin could keep coming up heads forever. It's good sometimes to be reminded that if your portfolio can go up $50 in a day, it can just as easily go down $50 in a day. Thankfully, my stocks rallied a bit, but I still closed down about $27 -- more than sufficient to erase yesterday's gain, and my first down day in a couple of weeks.
What's happening? Well, new 52-week highs are often followed by profit-taking, and three of my stocks -- Blackboard (BBBB), Sears (SHLD), and Toll Brothers (TOL) -- hit new 52-week highs yesterday. In the case of at least TOL, yesterday was in fact the second day in a row a new 52-week high was reached, possibly even the third (it's a little hard to tell from the chart). According to Jim Cramer, over 700 stocks hit 52-week highs on Monday (or was it Tuesday)?.
So today, BBBB is down 24 cents and TOL is down a whopping buck-forty. SHLD was down 75 cents during the day but rallied nicely and closed up four cents a share. Yeah, and TOL has done that to me before, too, those bastards. I mean, it's now only modestly above $53.50, where I once said I'd be happy to sell my shares and take a profit, instead of wildly above $53.50. What gives?
I'm still solidly in the black on all my stocks. In fact, BBBB is stil up 25% from where I bought it. I've even made 3% or so on Paxar (PXR), which I just bought recently; it was up a dime today. My iShares Emerging Markets (EEM) was up 43 cents and even my New York & Co. edged up seven cents after being down as much as 40 cents during the day.
Having a down day is no big deal. Over time, the good picks will out. It's a series of down days that you've got to worry about! Know why you're in each stock (trade or investment) and when you expect to get out of each (at what price, at what time, or after what trigger event) for both upside and downside. And when you have a down day, double-check the fundamentals, look for bad news, and if everything still looks good and your expected exit point hasn't been reached, just let it ride. Some of my investments are short-term, some are long-term, but on each one I know nothing of substance has changed, so I'm still keeping every one of them.
Update: TOL apparently has been seeing some action in after-hours trading; it's now down only 84 cents on the day (an improvement of 56 cents) and my total loss for the day is $14.70. I have occasionally seen minor fluctuations after the market closes; this is pretty big by comparison.
Posted by kindall at July 14, 2005 01:22 PM