As my readers know, I have dabbled a bit in the IPO market in 2013. At first I tried to get into three or four IPOs as they were priced. This was an extremely frustrating approach. A couple times I had difficulties affirming my orders as I was traveling or forgot. Then the times I remembered, I either got shut out or got an extremely useless allotment, where the cost of buying and selling shares materially ate into my profit (SFXE and QEPM fell into this category). So I changed tactics and the past three stocks I bought were post IPO. True, that way I would miss on the initial pop, but I avoided the frustration and I was able to buy the amount I wanted. So I have used this with SCAI, VJET and ATHM.
On VJET, I bought shares at $22.09 and sold at $24.13. That was way premature as they spiked over $60 and have settled back to $39.82. SCAI was same song, second verse. I bought at $26.80 and sold (prematurely again) at $26.95. Finally, we have ATHM. I bought them at $28.80. I watched them go under $28 and began to question the wisdom of my purchase, but mentally I had committed to hold for four to six weeks. Today that is looking pretty savvy as they are up to $31.65 (almost a 10% gain for me). But I am committed not be premature, so I am resisting the urge to sell until next year (yuck-yuck). The good news is that on ATHM I bought a very sizable share count (it is my 10th largest position).
I was reading the GS Elevator resolutions for 2014. He is very politically incorrect, but sometimes they are pretty funny (The Unofficial Goldman Sachs Guide to New Year's Resolutions). I thought I'd put out a few (not intended to be funny ones). While my overall results have been stellar this year (I am up 44.9% as I type); I still have some investing habits I would like to change.
- I want to be more patient. Great examples are the stocks I sold after September as you can see from table below. Why did I sell SLCA???
|Date Sold||Stock||Shares||Sold Price||Current Price||Change||Change %|
- I want to have fewer transactions. It is easy to kid yourself that more transactions will capture more profits. But I'd suggest the opposite is often true. The real key is to pick great companies that are cheap. Take the example of my kids' college funds. I bought two stocks (LNC and GNW) at the start of the year for them and then just held. They are up in composite by 91%. In 2013 I had 129 separate "buys". Now in fairness to me, some of those were buying positions in several tranches. If I back those out I had 61. And to cut me a little more slack, 20 of those were the 4 MFI tranches. Still, too many. Seems that 30 should be plenty.
- I will not chase pure momentum plays. I did "try" to follow some of the people on Ed's talking Stock in some truly short term/leveraged type plays (think NUGT). It did not end well, but that isn't even the point. The real point is that it is not an approach I am comfortable with, I feel like I have to watch every tick.
- I will try not to let my emotions rule my decisions. I work hard at this all the time. But every now and then I just sell something because I hate it. Or I buy something just based on a short positive article.
- I will practice good risk management techniques and not get too overweight in any stock.
- I will try to consider taxes, that is like an automatic penalty for selling early.
Interested in hearing other people's thoughts.