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Leaving Money on the Table - CHA
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Having just turned most of my initial short ETF positions into more diversified positions in individuals stocks this week, I did a quick check on my portfolio. Mainly, I'm down a bit but I'm not too unhappy with that having only held these positions a couple of days. Yes, I could have done better holding those shorts a couple days longer but as everyone knows, timing the market is difficult in the best of circumstances. This brings me to a trade I didn't expect so soon. I had just bought China Telecom (CHA) 2 or 3 days ago. After double checking my research, I realized I was not as happy about my position here. The severe storms in China have created some very large outages for the phone company and they will be spending a good chunk of cash on repairs which should lower their profits for this quarter. I came to the conclusion that I had just picked a China name I had heard but really did not do a good job of research. I sold my entire position after a quick 5% gain to lock it in and look for a better opportunity in China/Asia or elsewhere after some more research. Did I leave money on the table? I'm pretty sure I did. Did I get lucky to get out with a profit? Probably, but luck depends on how long you trust it. I'd rather lock in a quick 5% gain in a company that I was a little unsure of (poor research on my part) then hold a position where I did not know the company that well. CHA could very well continue to go up but I would rather take a small profit then get slaughtered in the long term for being greedy, especially when I realized that I had fooled myself into thinking I had done all the research. One piece of advice which lead me to this action was one of Jim Cramer's comments on managing a portfolio. He advises that you spend at least an hour a week reviewing each of your positions. (Whether you think he is a nut or not in general seems immaterial, this sounds like very good advice to me.) So, I guess this week, taking a small profit in CHA was a result of doing my homework. Only time will tell what grade I got today. As always, good luck to my fellow investors. | ||
Comments (1)
Good post. There is nothing wrong with a quick, easy profit. A 5% gain over a few days would be 100% or more annualized. Meanwhile your cash can earn interest and wait for opportunity to arise.
Tom
Posted by Thomas Armistead | February 15, 2008 6:43 PM