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@MikeM: I too have two buckets for stocks, and virtually all of my stocks are in iras, so preserving of capital is not necessarily priority one, although still important. I learned early on that setting a stop loss almost guarantees it will hit it My long term stock stop losses were fairly liberal (generally 15-20% down from purchase price) and once hit they went right back above and stayed above there for the most part. Some I bought back, some I let go. My other bucket , some people call spifs, are always 5% or less of portfolio and primarily are composed of 4 or 5 small or midcap stocks. There are not intended to be long term holds, but one or two I have kept for more than one year, but watch very closely. I no longer use stop losses on these either. I just watch them closely, retired.
Hi slick. I don't kid myself that the trailing stop is the end-all. I'm hoping that it saves me from big losses more times then not. If it wip-saws me, so be it. Setting a "liberal" as you say stop at 15-20% kind of doesn't make sense to me. If you do that you pretty much lock in a big loss. To me at that point, if you still like the stock, it would be hold 'till it recovers. I have 2 I bought before implementing trailing stop like that. Mistakes, but I'll wait it out.
I can think of 2 examples lately where the trailing stop worked well. I bought AAPL back in late summer at about 110. The stock rose to around 123-124 and then started to trend down. My 6% stop from recent high sold me out at about 117. Not a huge profit but it kept me from a big loss. Apple was in the 90's last I looked.
Another example was CHKP. Bought at 68.5, rode it up to about 88 before it too started to dip. My stop took me out at about 82.5. Nice profit on that one. I like that stock, so I actually bought back in when it kept trending down at about 76. We'll see how that goes.
Those are a couple winning moves. I won't get into the SLB or BABA buys before deciding to use stops.
Yes, cutting dividends to maintain credit ratings is a valid reason since the latter can significantly increase the cost of doing business. That could very well be what happened here.
However, if you see COP doing aggressive share buybacks in the next few quarters, it will be the usual story. CEO goes to the BoD. Directors tell him that unless he steadies the share bleeding and turns it around, they will be looking for a replacement. CEO goes to his executive team and says this year's bonus plan will be tied to the share price at the end of the period given to him by the BoD. The Marketing executive tells him there is no way to improve topline or margins with product or service. The CFO comes back with a plan that if they cut dividends and initiate share buybacks, it will halt the bleeding offsetting the one time hit from cutting dividends and if they initiate an aggressive cost cutting with layoffs, the margins will improve and if they plan the PR right, their share price will be bid up right to the target of maximizing their year's variable pay tied to performance. They can also keep doing share buybacks instead of raising dividends in the future. And they implement it immediately.
The biggest, persistent lie from corporate management "We don't pay attention to market movements and only focus on running our business and executing well".
@vkt With what you noted, and the words just before and after in that paragraph: "CEO goes to his executive team and says this year's bonus plan will be tied to the share price at the end of the period"
Ya......reminder of one of a company(s) mantra......"increase shareholder" value. So many established companies lose their vision of what got them to where they may have arrived, and it wasn't through share buybacks.
A sadly sad state of affairs for too many organizations and their worker bees.
I could scream and rant and tell stories of things gone wrong for companies, but it is too early on a Saturday morning; as I would have to strap a blood pressure device onto my arm.
Wishing that I had the desire and/or skills to do a complete review of changes in the accepted and apparently legal changes in accounting standards from 20 years ago and currently used by corporations.
The best that may be obtained for this house is to "play" around the edges with being an "investor" attempting to continue to dodge the bullets arriving from any direction. Too many days find we small folk are way out of our league against the large, fast, the machines and other, eh?
"If it works don't fix it" I guess I fit that description. At age 82 I own funds and stocks I expect to hold till dooms day. I expect everything I own to be profitable over the coming years. I don't like this market but don't make changes easily so I expect to hold what I now have. Call it stupid or stubborn. I've been through this before and made enough mistakes in past 45 years and will make more as I age. As they say, "till death do us part"
Back in 2000s I used to follow the story of the "then in trouble" American Airlines as I used to fly them a lot to Europe and was vested in their health. The story of that set of incompetent management team is enough to turn any Capitalist into a Socialist. The airline was in deep trouble and the management team apparently made a plan to take it private but its balance sheet was badly damaged and they had to fix it first. So, they told the employees that they were going to go bankrupt unless they got concessions in salaries (in addition to previous cuts). The employees were given a choice of a small lumpsum bonus if they became profitable or stock options. Obviously, not knowing the health of the company or its plans (and you are always advised not to invest in the company you are working for), most took the bonus option. The management set themselves an incentive plan that was based on stock price, not the strength of the balance sheet if it turned around.
Those very salary cuts and cutting many travel benefits allowed them to repair the balance sheet and so when they announced the quarterly report, the markets bid them up. The management were then rewarded with a bonus for the year that was greater than the profit they made for that year running into multiple 10s of millions while the employees each got a few hundred dollars. They blamed the employees for not taking the stock options instead.
As it turned out, 2008 happened and private equity interest went away. So they were stuck with a workforce that was entirely antagonostic, an airline they had almost completely stripped to make their bonuses and customers that were unhappy with the cuts. They had to get rid of the entire team and get new management to turn it around. But the previous management got more than rich enough to retire on this windfall.
Capitalism has the same problem Islam has, an inability to control its own extremists and exploiters so the system as a whole gets blamed.
Hello, vkt. This particular socialist just read every word of your post, and I sympathize and understand, 100%. In the same vein, I cannot help but to add the following link, from uncle Lewis Black, "the angriest man in comedy." This is a few minutes long, on "Greed." Yup. *Warning: if four-letter words are really an issue for anyone, ... ummmmm... WHY??? The human race has much bigger REAL issues to deal with. Anyhow, if that is the case, you might want to just skip this one: https://search.yahoo.com/yhs/search?p=lewis+black+on+greed&ei=UTF-8&hspart=mozilla&hsimp=yhs-001
AHahahahahahahahaha. Right when the sad song appeared to have run out of verses, another verse is found; and what appeared to have been just another sad story of investment woe begins to enter the Land of Allegory. This show is gettin' some sizzle!
Comments
http://www.bloomberg.com/news/videos/2016-02-05/chevron-downgraded-first-time-since-1987
I can think of 2 examples lately where the trailing stop worked well. I bought AAPL back in late summer at about 110. The stock rose to around 123-124 and then started to trend down. My 6% stop from recent high sold me out at about 117. Not a huge profit but it kept me from a big loss. Apple was in the 90's last I looked.
Another example was CHKP. Bought at 68.5, rode it up to about 88 before it too started to dip. My stop took me out at about 82.5. Nice profit on that one. I like that stock, so I actually bought back in when it kept trending down at about 76. We'll see how that goes.
Those are a couple winning moves. I won't get into the SLB or BABA buys before deciding to use stops.
However, if you see COP doing aggressive share buybacks in the next few quarters, it will be the usual story. CEO goes to the BoD. Directors tell him that unless he steadies the share bleeding and turns it around, they will be looking for a replacement. CEO goes to his executive team and says this year's bonus plan will be tied to the share price at the end of the period given to him by the BoD. The Marketing executive tells him there is no way to improve topline or margins with product or service. The CFO comes back with a plan that if they cut dividends and initiate share buybacks, it will halt the bleeding offsetting the one time hit from cutting dividends and if they initiate an aggressive cost cutting with layoffs, the margins will improve and if they plan the PR right, their share price will be bid up right to the target of maximizing their year's variable pay tied to performance. They can also keep doing share buybacks instead of raising dividends in the future. And they implement it immediately.
The biggest, persistent lie from corporate management "We don't pay attention to market movements and only focus on running our business and executing well".
http://i.share.pho.to/ae3f57ce_o.png
With what you noted, and the words just before and after in that paragraph:
"CEO goes to his executive team and says this year's bonus plan will be tied to the share price at the end of the period"
Ya......reminder of one of a company(s) mantra......"increase shareholder" value.
So many established companies lose their vision of what got them to where they may have arrived, and it wasn't through share buybacks.
A sadly sad state of affairs for too many organizations and their worker bees.
I could scream and rant and tell stories of things gone wrong for companies, but it is too early on a Saturday morning; as I would have to strap a blood pressure device onto my arm.
Wishing that I had the desire and/or skills to do a complete review of changes in the accepted and apparently legal changes in accounting standards from 20 years ago and currently used by corporations.
The best that may be obtained for this house is to "play" around the edges with being an "investor" attempting to continue to dodge the bullets arriving from any direction. Too many days find we small folk are way out of our league against the large, fast, the machines and other, eh?
Take care,
Catch
Derf
Back in 2000s I used to follow the story of the "then in trouble" American Airlines as I used to fly them a lot to Europe and was vested in their health. The story of that set of incompetent management team is enough to turn any Capitalist into a Socialist. The airline was in deep trouble and the management team apparently made a plan to take it private but its balance sheet was badly damaged and they had to fix it first. So, they told the employees that they were going to go bankrupt unless they got concessions in salaries (in addition to previous cuts). The employees were given a choice of a small lumpsum bonus if they became profitable or stock options. Obviously, not knowing the health of the company or its plans (and you are always advised not to invest in the company you are working for), most took the bonus option. The management set themselves an incentive plan that was based on stock price, not the strength of the balance sheet if it turned around.
Those very salary cuts and cutting many travel benefits allowed them to repair the balance sheet and so when they announced the quarterly report, the markets bid them up. The management were then rewarded with a bonus for the year that was greater than the profit they made for that year running into multiple 10s of millions while the employees each got a few hundred dollars. They blamed the employees for not taking the stock options instead.
As it turned out, 2008 happened and private equity interest went away. So they were stuck with a workforce that was entirely antagonostic, an airline they had almost completely stripped to make their bonuses and customers that were unhappy with the cuts. They had to get rid of the entire team and get new management to turn it around. But the previous management got more than rich enough to retire on this windfall.
Capitalism has the same problem Islam has, an inability to control its own extremists and exploiters so the system as a whole gets blamed.
*Warning: if four-letter words are really an issue for anyone, ... ummmmm... WHY??? The human race has much bigger REAL issues to deal with. Anyhow, if that is the case, you might want to just skip this one:
https://search.yahoo.com/yhs/search?p=lewis+black+on+greed&ei=UTF-8&hspart=mozilla&hsimp=yhs-001