When I started investing five years ago on Sharebuilder, the plan was to be a buy-and-hold investor. What I didn’t realize is that buy and hold investing isn’t a wise strategy for companies that are extremely volatile and killing your gains.
My stock portfolio (not counting index funds over at Vanguard and my IRAs/401k) is currently $58k, which is not a fortune, but also nothing to shake a stick at. Increasing that 10% a year is great, losing 30% a year is not so great. My stock portfolio has gone up, and down, and up and down, and down, and down, and up again. It’s now up 8.6%, with a few big losers, and a few winners to date. The biggest winner — no shock — is Apple.
The biggest loser is Comverge, which I originally bought for $18 a share and dollar cost averaged down to $1.65, where it is today. While I haven’t thrown Comverge out the window yet (after losing $4.5k, I prefer to let it live on as a paper loss instead of admitting defeat), today I decided it was time to get rid of one stock that has been sharply trending downward. Continue reading
One of my earliest mistakes investing was getting over excited about how easy it was to invest in stocks. I first invested in mutual funds and index funds, and then quickly got into buying a little of this and a little of that. As I detail in Monday’s upcoming post, my portfolio has been up (28%!) and down, but right now it has practically lost all its gains. So much for compound interest.
Of all the losers in my portfolio, the biggest loser of all is Comverge. They seemed to be doing reasonably well when I bought it, knowing it was a risky small cap stock. I started out with a small amount of investment, a few hundred dollars, and somehow dollar-cost averaged down to the point where I invested $6252 in it. I was pretty adamant about not putting more than $2k into any one individual stock unless it was clearly an out performer, but I must have gotten caught up into the excitement of getting a “deal” on the stock as it went down and down and down.
The first time I bought Comverge, it was at $18 per share. I didn’t buy all of the stock at that price (luckily?) but today it’s a whopping $1.56 per share. All that’s left is $1836 of that stock. So right now I’m wondering if I should cut my losses and sell, or wait until the stock (maybe) bounces back a bit before selling (though that might just be asking to lose another $2000!)
Of course, the other option is to keep dollar cost averaging down. That is seeming more and more foolish at this point. It could have worked for some larger companies that just got hit in the recession (ie I wish I put all that money into Whole Foods at the time!) — in any case, right now I’m baffled by investing, and afraid that my minimal gains over the past five years will be completely washed out with a few bad stock choices. Besides, there has to be a better place to put $2,000 to perform than a stock that has lost so much of its value in the last four years, right?