I just got Corning'd

[Fermion]

What lousy timing. I bought 2000 shares of Corning (GLW) in my IRA at $14.90, then saw it drop to $14. It finally climbed back up to $15 and I sold 20 Jan 2014 $15 calls against the shares for about $1600. I figured it would be a nice little profit without a huge risk, given the dividend and Cornings general go nowhere fast stock.

Fast forward ONE day and Corning pre-announces great news plus a Samsung deal, stock is up after market $4+ per share.

One day people! ONE DAY! I know I should still feel happy with the $1600...but I can't help but think about the $6400 lost opportunity.

 

[NW-Bound]

Well, so what's new?

Looking back, I find myself often selling rising stocks too soon, either outright or via covered calls, while holding losing stocks too long. Perhaps it's better to put trailing stops on these rising guys.

 

[Fermion]

But Corning isn't supposed to be a rising stock. It is supposed to be a market hated, relatively safe, boring glass maker who pays a 2.8% dividend and has cash on the books. The perfect stock for a covered call.

I guess I need to move on to the next hated stock with good books. Probably a miner...if I can find a miner with good books...

 

[NW-Bound]

But you have made some lucky money, and you knew it. Time to move on.

On the other side of the coin, I have had stocks crashing 10-30% in a day when a bad earning came out. And often, it was just a downgrade from an analyst at some brokerage. Back in 2000, a few of these analysts got death threats from their downgrade.

I owned GLW back in the dot-com days, and fiber was really hot. Made some money, but forgot what it was. Have not been following it for perhaps 10 years.

Here's a lucky buy I still remember from more than 10 years ago. Back then Sysco, the premier food distributor was going great. So, I looked and found the 2nd in line. I believe it was United Food Service. It was an overlooked stock, and seemed a bargain, so I bought it.

Only a month later, it was bought out. The corporation taking over offered a huge premium, something like 75% over the market price. Darn! Never got that lucky again.

 

[Fermion]

Well said.

Looking at it this way, the $30,000 I have tied up in GLW until my shares are called away in January is almost as safe as a bond now, being that the $15 calls I am short will be $4 or more in the money. I also get to collect the $200 dividend in November (and pass go?). So $1800 return on $30,000 for a 3 month holding period = 6% return or 26% annualized return. Could do worse.

I mostly index but occasionally buy a individual stock if I feel it has been oversold or overlooked.

I should have known better on Corning since insiders had bought shares....that is so rare these days.

 

[NW-Bound]

When a covered call I made became deep in-the-money, I just wished it would get exercised early, so I can free up my money.

And occasionally, I would not want to let go of the stock, and would buy back the calls (at the higher price of course), and sell another call at a higher strike further out at about the same premium. Then, the stock failed to meet expectations, and I did not do as well.

All this stuff is not that easy, and one has to do it himself to know money does not come easily from just clicking on a brokerage trading screen.

 

[Fermion]

It isn't easy or hard, it is just rolling the dice and trying to play at the section of the table with the best odds.

The best game in town is indexing. That isn't as fun as betting a small amount on number 17 and spinning the wheel though. Just don't bring more than you can afford to lose to the game table.

 

[NW-Bound]

I have been to LV quite a few times, but never to gamble. I do not even know any card game, but think that speculating in the stock market is more like a poker game than a crapshoot or the roulette. A lot depends on chance, but there's some skill involved.

Indexing may seem easy, but what index? When and how often to rebalance? The difference in execution between individuals may build up to some sizeable portfolio growth over time.

 

[MRG]

You got a nice pop, enjoy! I had some AAPL at 600 that I sold CC on for 685. Then got greedy and bought it back. Now how silly does that look in the rear view mirror. There's a difference between money in the market and money in your account!

MRG

 

[davismills]

Don't worry too much about it. I bought Apple for 19.00 a share in 1995 approximately. Thought I was a genius when I sold it for 30.00 two years later. NOT.

 

[Andre1969]

It's funny how things work out sometimes. I've had stock in Nordstroms's (JWN) since around 2001 I think. Not a whole lot, though. I'd buy a bit, sell a bit, as prices fluctuated, but when the "great recession" hit, the stock fell from a peak of around $50 or so per share down to around $10. Fortunately, there had been a split or two, and I think even at $10, I was down to about what I'd paid, so I only lost appreciation.

Well, it was paying 60 cents per share at the time, which at $10/sh was a 6% yield. So I figured I'd buy a bunch more. After all, I wasn't getting 6% in any CD or MMA by that time. Well, fast forward about 4 1/2 years, and now it pays $1.20 per share. It's also shot back up to around $58/sh. So, even though I bought it for the dividend, that appreciation was a nice, unintended side effect!

Same thing happened when I loaded up on Cedar Fair (FUN), the company that owns Cedar Point, Kings Island, Dorney Park, Carowinds, and a bunch of other amusement parks. I paid around $7-10/sh for most of it. It was paying a $1 dividend, so I thought hey, pretty sweet.

Well, almost immediately, the dividend dried up. But then the stock took off. The reinstated the dividend, paying $1/sh in 2011, $1.60/sh in 2012, and $2.50/sh in 2013. So, again, the dividend is pretty sweet. But the real boost, again, came from the rise in share price...up to around $44/share now.

Kinda makes me wish, sometimes, that I put everything I had on JWN back in early 2009. Or, everything I had on FUN in early 2010. But, I can say the same for a lot of stocks. If I'd put it all on AAPL back in 2005, when I initially bought a few shares, I'd be grinning from ear to ear right now, as well (although I would've probably worried when it fell off its high last September!)

But, as they say, hindsight is always 20/20. And, even though those risky moves would have made me a lot of money, I'm still doing okay.

 

[Fermion]

I got a little bit more profit squeezed out after all. I bought 2000 shares couple hours after the open at $16.87 then sold it just now for $17.55. Makes me feel a bit better

 

[NW-Bound]

You lucky you!

Some guys have all the luck
Some guys have all the pain
Some guys get all the breaks
Some guys do nothing but complain ​

Rod Stewart - Some Guys Have All The Luck (1984) - Original Music Video - YouTube

 

[Fermion]

I hovered over the sell button at $17.55 because the back of my mind thought....you know this is going to $20 in a month or three. But I was not comfortable holding 4000 shares for very long, even if 2000 of them are still covered by the $15 short calls.

Now I can't do anything in that account for a few days. It is a cash account and the funds have to settle.

 

[eta2020]

Looking at what GLW did today.... You are lucky

 

[jazz4cash]

...Kinda makes me wish, sometimes, that I put everything I had on JWN back in early 2009. Or, everything I had on FUN in early 2010. But, I can say the same for a lot of stocks. If I'd put it all on AAPL back in 2005, when I initially bought a few shares, I'd be grinning from ear to ear right now, as well (although I would've probably worried when it fell off its high last September!)

...

You DO realize the stocks would not have performed so well had you gone "all in", right?

 

[Andre1969]

You DO realize the stocks would not have performed so well had you gone "all in", right?

Oh, of course, that goes without saying!

 

[wingfooted]

You'll never go broke making a profit on every deal.

 

[H2ODude]

This thread reminds me of why I gave up on individual stocks, which I only played with during late 90's. I've returned to my mutual fund ways, predominantly index. Some days are up, some down, AA is fine, so don't worry. The temptation of the gains is always mitigated by the danger of the drops in individual stocks, so I just gave up on it. Boring? maybe, but in time the indexes always go up. Well, pretty much.

 

[Fermion]

I will agree with you for the large portion of one's investments. Still, it is kind of fun to play a bit with a smaller amount. 39% YTD in my fun money account, not half bad. Of course this is in a year where index returns are not half bad either.