Bumpy ride of stock trading, part 3 — finale
Back in March I wrote a post about the volatility surrounding stock trading. I had no idea at the time how crazy things were about to get and how this will turn into a three part series. It’s been interesting to put my thoughts down as I go along and it’s fascinated to see the turns that trading has taken in the last three months.
Background
In case you missed the earlier parts, here is part 1 and part 2. I spent most of the time discussing what the trading in volatile times feels like and used Carnival stock as an example. I acquired it in early March purely on speculating/gambling reasons. Got smacked with reality and -60% unrealized loss, averaged down, just to be up over 30%. Where am I now?
Sold all of my carnival shares, took the profits, and bounced.
Timeline of the exit
I sold everything on June 10th, @ $21.43/share. I was’t planning on doing this actually — the plan was to keep CCL until it was at least $30 but couple things transpired that made me change the plan.
The main reason: its meteoric rise. It had been languishing around $10/share and then it just kept on rising, blew by my average cost and reached as high as $25/share. It was exhilarating to watch, especially if you have a large number of shares (large for me at least) but completely unexpected. The cruises are not even close to coming back, COVID-19 hasn’t gone away, I just could not justify the rise in any way and now betting on the reality catching up. There are no sure things in investing, you can’t predict the future: when offered a profit you either take it or settle in for more based on conviction that things will continue to be better. I was preparing to hold the stock for a year before expecting to see a profit but the timeline got significantly shortened and I just jumped on it.
The second reason: some of my other “Covid bets” were also rising and had smaller risk profile than carnival. I considered a gradual exit and trimming the position instead of selling it all, but selling it all gave me the profit and then I used the capital from Carnival to buy some other shares that I thought had lower risk profile.
Finally the third: too many people talking and hyping up “buying the dip” and going after airlines and cruises. This could explain the meteoric rise and you just know that things like that don’t end well. The rise could be largely based on FOMO and you don’t want to be riding that wave for too long. It disappears in a blink.
I am sure there is a high chance next year at this time CCL is trading at $50 and I passed on even greater profits but it does not matter. This experiment I am doing is not about buying and holding: that’s what 401k and betterment is for.
Twist to the ending
This being the stock trading, there is always a twist. When I sold my shares, the CCL had been going down for a couple of days. I actually missed a window of selling at $24–25 costing myself nice income without having setup a trailing stop loss limit sell. You live and learn.
Anyway, it dropped all the way to $17. And I picked up some of it, again. Much smaller position than before. It rose back up to $19 levels, and again I just got this bad feeling, and got out again. No more Carnival.
