What do you do with that dog stock?

[silence]

So I bought into a stock that in hindsight I probably shouldn't have, a long time ago.

Not really knowing what I was doing, it went down, and I assured myself that I was an 'investor' so I would just hold (sound familiar?). It's been sitting at the low price virtually unchanged for a very long time.

It has good announcements occasionally, like they have made an agreement to sell their product through a large company, but it seems like they just keep re-releasing the same facts every few weeks and trying to spin it into 'new' information. The market sees the info, it might go up 3%, but the next day it will be back at the old price.

So this small biotech isn't dead, and one day it might be something bigger....... but how long does one wait? What would you do if you had a dog like this in your portfolio?

Looking at my position summary today I saw it, and thought I may as well just sell it and forget about it, and consider that loss my lesson/reminder of what not to do ever again.

Then I thought, since it's not going anywhere, I may as well just hold onto it and maybe one day I'll check on its price and it will be moving upwards.

What's your 'dog' strategy?

I've withheld the name of it to make this a generic thread about how to deal with bad decisions, but I don't mind saying what it is if anyone actually cares.

 

[nioka]

Check the fundamentals. Check the announcements. Decide if it is good value at the price it is today. Forget what you paid for it. The answer will come to you very quickly. If it is still a dog then bark at it.

 

[prawn_86]

It depends on your specific strategy for that stock.

Did you intend to hold it long term? If not why wasnt a stop in place?

Now you must decide wether you are comfortable with your money sitting there or if there are better opportunities? Classic opportunity cost scenario.

Personally if i buy i stock i have a time frame on it when i purchase and will not sell at a loss until that time frame is reached. I will however sell at a profit if it reaches my target before the timeframe.

Short term i tend to have stops. But still have target prices and timeframes, just a lot shorter.

 

[nizar]

Dump it.

Holding it is a waste of time and money and OPPORTUNITY.

Only my opinion........

 

[noirua]

Hi silence, If you give us the name of the stock we might all start advising you, which may be contrary to ASF rules.

Many people who went through the dotcom boom, still have stocks that are dogs. I have one that was once $1.80 and is now worth a very small fraction of that. At least it's still alive as very many went under.

Forget about what you paid for the stock and ask yourself if you would buy it now at the present price? (nioka posted the same, maybe great minds think alike) I'm quite content holding my stock and added a few more - is yours worth considering doing the same? (Obviously you need to do your own research)

Good Luck

 

[nioka]

Rereading your post I find that a stock I held for a long time fits the bill. OIL. My thoughts on that one were to sell it, put it on a watch list called "buy back" and when there is some good news I will buy it back because I believe it has a future. In the meantime I am using the funds in another spec investment. Do I ring a bell?

 

[nizar]

Many people who went through the dotcom boom, still have stocks that are dogs.

(Obviously Im not talking about you specifically noirua, im sure you do well)

BUT this is exactly why many people (probably the same many people) lose money in the stockmarket.

Because they take their winners too quickly to lock them in, which means they never have any huge winners.

But perhaps more importantly, they don't know when to take a loss, so they end up having huge losses. They think, its only paper, you don't want to lock in a loss! Better to wait for it to recover before selling

To succeed in the markets you have to know exactly what are you doing, including.

*What to buy.
*When to buy.
*How many to buy.
*When to sell at a loss.
*When to sell to take a profit.

And try to find a method that allows to you keep your losses small and MILK those winners for as much as you can.

 

[noirua]

Spot on nizar. Some of us need a stick of dynamite to make us sell. A paper loss is a real loss, as you say.

 

[rub92me]

You mentioned it was a small Biotech company. In my experience these are probably the least predictable. Sometimes they can be in the dog house for ages and then make a large move up in a few days based on a patent announcement or a successful trial. I've played with these in the past, but look very carefully at their cash position and cash burn rate. If they've been diluting share value over the years by raising capital at ever reducing share price, with no hope of being cashflow positive in the next 2 years, then I stay away or would sell out.

 

[Sean K]

If it's truly a dog then take the capital loss, and enjoy.

However, if it's just underperformed, and might be in a particular sector that is out of favour, or might be a turn around/value/contrarian investment, then it might be something to back up the truck on.

Largely depends on if you a technical or funny investor, which relates to the above.

 

[son of baglimit]

kennas - surely thats the only answer - sell it and use the CGT loss to your favour, either this year or in the future.

make sure if its in the future you keep carrying it forward.

 

[krisbarry]

I am assuming its BLG

 

[SevenFX]

Nizar has some good points in his second post and tend to follow those principals generally.

Though early experience is sometimes for some people the best teacher, and you having experienced this will make you a better investor in some ways on your future trades (right)..

Given it's some time now (perhaps months, year(s) maybe) and it hasn't recovered in this (mining) bull run, it maybe months/years b4 it does.. if/when the bio's have their time again or the company has huge find.

Also worth considering small can become smaller should a correction occur.???

Having said all that... If it wasn't/isn't a large percentage of your portfolio and it hasn't a signigiciant $value, well mistake made, hence I'ld hold it in the "hope draw".

To counter counter my above points :, holding it could reinforce bad behaviours, and the letting go of losses may never occur, or only occur on a bigger loss than this bio...?????

SevenFX

 

[nizar]

If it's truly a dog then take the capital loss, and enjoy.

However, if it's just underperformed, and might be in a particular sector that is out of favour, or might be a turn around/value/contrarian investment, then it might be something to back up the truck on.

Hahahahaha at the "back up the truck" comment.
Thats gold, especially coming from a Moderator lol

Well I think timely sector rotation can be very profitable.
Those that got out of uranium in April/May and moved into oil and gas would know what I mean.

An underperforming sector is not a reason to hold a dog in my opinion.

 

[nizar]

Though early experience is sometimes for some people the best teacher,

It is indeed accurate that you say for some people.

A mate of mine was never interested in what I used to do ie. discretionary trading. This guy is a property champion who is very business minded.

But when I told him about mechanical trading he got right into it.

He'll probably never have the problem of holding dogs or having no stop, etc, and he will mostly likely start off a champion.
Which is alot better than I could say for myself.

So yeh you don't have to start off the hard way, and I agree with you here.

Oh, and a small share doesnt need a correction to become smaller, trust me on this one

 

[JellySausage]

This could be a fun game.

I guess it's VCR.

 

[nioka]

I am assuming its BLG

I've got that one too. Still holding and still waiting for some good news. I have classified it as "slow" but not yet a dog.

 

[nioka]

This could be a fun game.

I guess it's VCR.

Now that one was a dog which I sent to the pound some time ago .

 

[Aussie2Aussie]

Now that one was a dog which I sent to the pound some time ago .

My bet - NAL.

A dog that will never bark!

 

[Wysiwyg]

What is the definition of dog stock?

I thought it was a stock which share price decreases/languishes continually after buy in.