The Redo

Well we certainly live in interesting times, at least in the US. I suppose Brazilian citizens would say the same, as that country has yet another political crisis brewing. Who knows what will happen him the future, either politically or economically. What we can do is stick to our game plans and keep allocating capital in ways that will help us reach our own long term goals. For Ms. IS and I, lately that has meant conducting a few swing trades….while keeping most of our capital available for long term purchases.

Recent Trade

On Monday of this week, we closed out of our position in Pan American Silver (PAAS) for a net profit of 10%. I had to laugh because if we had held on to the position until Wednesday, we would have made another 5 or 6%. No matter. We bought the stock right. Made a little less than $600 profit, and got out. Amusingly enough, the same stock is down sharply today……and trading well below where we sold. Haha, gotta love the volatility in the precious metals space. Volatility is fun, especially in a boring stock market, but remember to be careful with it.

Also amusingly, I relearned a trading lesson this week. A particular company’s stock was recently bouncing around below $9 per share. Looking at the chart, I decided that $9 would provide a significant amount of overhead resistance to the share price. As such, I decided that I should sell out of that trade at $8.95……and I set a limit sell order at that level. A few days later the stock price was very close to that $8.95 sell level. Before the market opened that day, I canceled the limit sell order. Why you ask…..simple…..I was GREEDY. Stupid, stupid, stupid. I wandered off to do some activity with the Little Man, and figured I’d check on the share price around lunch time. Well, the share price spent all morning between $8.9 and $8.98……but by the time I returned it had had started a downtrend again. If I had been watching, or left that limit order alone, we would have made a tidy profit and regained about $10k of our capital. But we didn’t. The position has spent the last several days in the red. Well, apparently that was a lesson that I needed to relearn. I am grateful we decided long ago that we would only trade in the stocks of companies which we are happy holding for a long time. Limited downside, but it’s annoying when I outsmart myself.

My error here isn’t that I should have been paying closer attention to that trade. Watching each tick of a stock price would drive me absolutely insane, besides, I’ve never thought it was a good use of my time. Mrs IS and the Little Man count on me to keep the house running. Plus, what good is Flexible Independence if we spend it chained to a computer. Nope. I need to stick to the plan, admit when I’m wrong, and don’t be greedy. Lesson (re)learned!

Big Picture

I have been paying extra attention to our long term investing opportunities. Even though the equity indices haven’t sold off meaningfully……..doesn’t mean that there aren’t opportunities for us to invest our money for the long term. Last fall we decided the time was right to start building our position in Vanguard’s European ETF (VGK). Likewise, early last year we adding to our long term position in Union Pacific (UNP)….while the low oil price had railroad stocks in freefall. Each of those positions resulting in substantial gains. In the case of Union Pacific, we sold some of that stake for a 50% gain a few months ago. As an aside, I think Union Pacific’s shares are overpriced at this point….again given how current oil prices are a huge headwind for production in the Bakken…..but would like to add to our position at lower prices.

My point is that even if the broad equity markets are cooperating……there are usually good opportunities under the surface. The most recent “one that got away”, was Disney (DIS). While not likely to explode higher, it’s shares were a nice relative value down around $90. Unfortunately, I hadn’t come around to have a favorable view of Disney yet. If the opportunity presents itself again, I almost certainly will buy a decent stake. I have always viewed Disney as three separate companies, with the added benefit of being about to cross market those companies. I love the intellectual property and entertainment franchises they own. I like the ABC/ESPN business. I hate the theme park business. The theme park business is just too cyclical….plus I am probably biased because I don’t enjoy attending theme parks. Scratch that, I hate attending theme parks. Perhaps it was because I went to Walt Disney World a few too many times as a child. Stifling Orlando in August. Crowds. Nearly 100% humidity. Soggy pimento cheese sandwiches. Ugh.

All the same, I’ve added Disney to our list.  It is one of those businesses that I feel comfortable owning for decades.  The stock price may not soon get down to a buy able level again, but I’m spending added time researching the company. Disney has some very unique qualities and assets, which are almost impossible to replicate. My question for you is this: Which businesses do you regret missing the opportunity to invest in….. that you are still watching right now?

Disclosure: We are long UNP. This article is for informational purposes only and should not be considered a recommendation for anyone to buy, sell, or hold any equities. I am not a financial professional. Please consult a financial professional before making investment decisions.

10 thoughts on “The Redo

  1. Dividend Reaper

    Surfer,

    I can share you woe of waiting to pull a stock out soon enough. Very recently I had the same chance to do so with ARII and for a decent profit but I failed to pull the trigger fast enough thinking I’d ride it a little higher. Teaches me to get too greedy ;). Thanks for sharing.

    Reply
    1. Income Surfer Post author

      Glad you enjoyed the post Reaper, but I’m sorry you can relate :/ We each have that tendency, and it’s one of the reasons that I don’t consider myself a good trader. I hope you have a good weekend and missed the tornadoes the last couple days
      -Bryan

      Reply
  2. Financial Coach Brad

    Timing the market is tough. Some would say impossible. :)

    I only hold index ETFs now, but back when I traded individual stocks a bit, I used to sell put options on stocks I wanted to own. I’d sell the option at a price point where I wanted to buy in anyway. If it reached that point, I got the shares. If it didn’t, I got the income. I find that options take a look of effort to do well but for people who really get into trading, its something to look into.
    Financial Coach Brad recently posted…What is the 4% rule and how can it help your financial planning?My Profile

    Reply
    1. Income Surfer Post author

      Perfectly timing a move is just about impossible Brad. Funny you mentioned selling puts. We are just starting to educate ourselves about that process. There are only a hand full of amazing individual companies….we would like to own for the long term. I think selling puts in the next bear market is one way we will accumulate some of those positions. The majority will be on the passive side, but I cant stomach most index ETFs at these prices.

      I hope you have a great weekend
      -Bryan

      Reply
    1. Income Surfer Post author

      Good to hear from you Alexander. It has been quite a while. I’m always trying to learn and grow as an investor, but these are odd times. Nope, I don’t like any of those things…..but at least now I have someone to offer those soggy pimiento cheese sandwiches to. Score!

      I hope you have a great weekend, and are enjoying some solid weather. It was nice up your way last May. We had a great time
      -Bryan

      Reply
  3. Amber tree

    We all need a refresher on investing lessons once and a while… IT keeps us sharp.

    On missed stocks… I get ysed to that. I build a quite log list to watch for options trading… There is often one that runs away and another one that offers opportunities.

    Reply
    1. Income Surfer Post author

      Haha, I’m glad you enjoyed the post…..and I completely agree. Our watch list is fairly long also, but I really haven’t gotten the hang of screening for options. Still learning that side of the game. I think your post earlier this month was spot on, about the benefits of going out and meeting like minded people in the investing/FIRE community. Meeting, or emailing, with such people is my favorite part about blog-o-sphere….and the part that really keeps us blogging.

      I hope you’re having a great weekend with the family.
      -Bryan

      Reply

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