Sold My Oldest Stock

[yakers]

I deserve a 'market timer medal' for the sale but I absolutely know it was all luck. BWA, Borg-Warner, is my oldest stock. Started DRIPing this 15 years ago. Most of the time just $50 a month. Discontinued the DRIPs years ago and rolled the stock into my Wells Fargo PMA trading account. I knew this company from childhood, always had an idea of its products and market successes but not always its financial condition. Good company, I would still recommend it as a long term buy & hold type company although it has dropped the 1% dividend it had for years, it was a growth company with a dividend. I had planned to sell to cover 2009 expenses not covered by pensions. But it tanked with the automotive collapse and I got 'lucky' when UST was bought out and selling that stock covered 2009. Now BWA had come back a bit and I set it up to sell now while capital gains tax is still low. Cost basis was about $7,500 and sale value was about $22,250. So some capital gains tax to pay. Just got lucky because on the sale day the stock shot up 10%. And it fell the next day & since then although I expect it will recover over time. Maybe a buying opportunity for someone else? Never saw this stock go up 10% ever, but couldn't have picked a better sale date if I were an insider. Non pension expenses are now covered for 2011.
Now I would claim my market timer medal, just don't ask me about my MGM stock

 

[haha]

I believe my allocation is only about 55% stocks, and I have pretty high embedded CGs so I don't want to sell. However, I did buy a small hedge a few weeks or so ago, long a basket of VIX futures in the form of an ETN. I didn't buy enough to hedge my entire portfolio but I do have enough to mke these down days less troublesome. Meanwhile I expect there will some steady rollover erosion if the market stays tranquil. VIX is right up alongside its long term lows so I think actual VIX price action that would be negative to my position should be minor.

Stocks in general are clearly as overvalued (or not, depending on your assessment) as they were in fall 2007.

So far this derivitive security is up almost 15% from my buy-in. My plan is to hold it until fall or some definitive selling climax along the way.

Ha

 

[drb111]

Stocks in general are clearly as overvalued (or not, depending on your assessment) as they were in fall 2007.Ha

Really? S&P will earn $81 according to concensus fwrd earnings...puts the index at 14.5x todays close. Well below historical valuation. I'm not claiming stocks are cheap, but curious what metric you are using to say "stocks are clearly as overvalued as they were in 2007".

 

[yakers]

I believe my allocation is only about 55% stocks, and I have pretty high embedded CGs so I don't want to sell.

Ha

Well, with CG taxes going up maybe this is a good time to sell?

I did buy a small hedge a few weeks or so ago, long a basket of VIX futures in the form of an ETN.

Stocks in general are clearly as overvalued (or not, depending on your assessment) as they were in fall 2007.

So far this derivitive security is up almost 15% from my buy-in. My plan is to hold it until fall or some definitive selling climax along the way.

Ha

Looks like a good day for your VIX ETN, up 10% in one day

VIX-futures ETN jumps nearly 10% on turmoil - MarketWatch

Not sure how I would use an asset like that. Hedging is more important to me if I have a short time need for an asset, like funds for college. Usually I shift to something more stable eventually cash as the event approaches. Over longer periods of time I rely on the 'market to provide'. So it is interesting that you reduce volatility by hedging with volatility futures. Sort of understand the idea but more complicated than my simple investment approach.

 

[haha]

Really? S&P will earn $81 according to concensus fwrd earnings...puts the index at 14.5x todays close. Well below historical valuation. I'm not claiming stocks are cheap, but curious what metric you are using to say "stocks are clearly as overvalued as they were in 2007".

Great. I have no interest in debating this aspect of it. As my post said, "Or not, depending on your own analysis.

Ha

 

[drb111]

Great. I have no interest in debating this aspect of it. As my post said, "Or not, depending on your own analysis.

Ha

Your posts seem insightful, so was curious what metric you were using to assume mkt overvalued. I was using historic PE valuation. Not trying to debate...

Incidentally, nice sale on the Borg to the OP

 

[haha]

Your posts seem insightful, so was curious what metric you were using to assume mkt overvalued. I was using historic PE valuation. Not trying to debate...

I use several, but rely most on Shiller's PE10, todays price divided by a 10 year arithmetic averaging of real earnings. Sorry for seeming touchy in my earlier post. Everytime I post anything that relies on a determination of equity valuations someone wants to debate it. But the topic is too intricate to do well on a bulletin board so I don't like to.

Ha

 

[yakers]

Another good day for VIX, up 7.89% haha is laughing all the way to the bank. And we know how well everything else did on May 6th, one of the most interesting market days ever.