Small Numbers – Big Percentages

Today I face the eternal conundrum I have with stocks priced like options.

When I buy one of these stocks for a couple of bucks a share, it seems like more often than not, the stock goes down.  Take my little speculation on Citicorp from the 26th (last Tuesday).  As usual, my $3.24 purchase price was too high within a couple of hours of making it.

The stock closed that day at $3.15, for an immediate loss of of several percentage points.

Today, that stock is trading at $3.38.  One a one-week holding period, that’s 4.32% return, which annualizes to well over 200% per annum.  Do I take the profit?  It’s a huge percentage, but not a huge number.

The chart shows a lot of congestion around $3.50 a share, so if this upward move in price keeps going, I expect that zone will turn into a trading barrier that could survive weeks or even months.

Needless to say, if the double-dippers on the economy are right, what will drive the market down will be loss in confidence on consumer household finances, which will hurt C mightily.

If I don’t take profits, will I be sitting here a year from now wondering why I didn’t?

OK, I think I’ve got a solution.  I’ll set the price to sell so that profits from my one week in the stock covers this month’s health insurance.

I used to think about work when I was a kid in terms of how much entertainment I could get in exchange for the work.  Mowing a lawn or shoveling a driveway could pay for a movie and that overpriced popcorn and candy.

In my 20’s and 30’s, I thought in terms of extra work or income to cover going to concert or a professional ball game.  By the time I was in my 40’s, I thought in terms of a vacation or a nice antique

I guess this is the AARP version.


Good luck to all.  Feel free to comment on how you decide to take short-term profits.


One Response to Small Numbers – Big Percentages

  1. Roger says:

    Mine is expensive wine.

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