This is a 3:45 intraday update of Turov on Timing for Tuesday, August 2, 2011.
In the aftermath of today’s selloff, I’m sure I’ll get one or two panicky emails from clients. To them, I would respond with one of the 101 Wisdom Bullets I described at my 2006 Seminar. Here’s that text:
Assume you’ve bought a stock at $40 a share and now it’s $30 a share. What should you do now?
I’ve heard many, many answers to this question over the past 45 years. One of the most common goes something like this: “Well, I bought it at 40. It went down. I made a mistake. Let me sell.” Another common answer: “I’d buy more or hold; if it was a good buy at 40, it’s a better buy at 30.” This is interesting because these two most common comments are diametrically opposed…
Another surprisingly common, and interesting, answer: “Sell half of the stock, and if it starts to move up, buy more.” Every single time, this answer comes from a woman. One of the observations I’ve had over the years – and this is purely an observation – is that women have different kinds of answers than men. There’s nothing wrong with that. It’s just a different thought process than most men would go through.
Now for my answer. I would ask myself, “What would I do if I had no position?” That’s what I would do. The reason is because the market has no memory or knowledge of the fact that I do have a position. Furthermore, that’s what I would do regardless of whether the decline from 40 to 30 was a slow move over a year or if it was on a gap opening following bad news. Markets don’t always flow nicely and gently and softly. Stuff happens.
Every single day I consider that I have no position. So what would I do if I had no position? The fact that I already have a position is irrelevant.
Thanks for the opportunity to be of service, and I’ll email you again in about ten hours.
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