Huge loss on FDX single stock

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1789
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Re: Huge loss on FDX single stock

Post by 1789 »

WoundedWing,

There is no judgement here. We all learn from eachother and i can openly tell you that i am not a fellow BH. There is so many people who knows more than me and more experienced in investing. (They lost so much money In investing and i am here to learn in order NOT to repeat what they have done wrong in the past).

Please kindly re-read history. What we call stock market was much older than you think. Dont think US is the country which stock market was invented first. Newton was like you and he was playing with individual stocks. He profited so much money by betting on South Sea company. Until it didn't work anymore. He decided yo jump back In to gain more money (poor him: greed makes humans do all kinds of things) on a skyrocketing South Sea. And then then storm arrived.It was too late to move out. His loss estimated to be 4-5 million dollars in todays money.

Why do you belive you are better than Sir Isaac Newton? You are luckier than him for now until you are not luckier than him anymore.

Ofc this is your money and you can do anything you want with it. We are in open forum, so i added my thoughts.

Good luck
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
DarkHelmetII
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Re: Huge loss on FDX single stock

Post by DarkHelmetII »

averagedude wrote: Tue Dec 17, 2019 6:08 pm If this loss motivates you to never buy individual stocks again, this could be the best investment mistake that you have ever made.
+1
rich126
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Re: Huge loss on FDX single stock

Post by rich126 »

gomsoon wrote: Tue Dec 17, 2019 6:07 pm
livesoft wrote: Tue Dec 17, 2019 6:03 pm Sell all. If for some reason you realize any capital gains, then your loss will offset them. Up to $3,000 of excess remaining loss can then be used to offset ordinary (i.e. non-capital gain) income. Then the excess remaining loss gets carried over to next tax year where the process repeats.
It's really difficult for me to press that "Sell" button when my hard earned ~$9,000 is going to evaporate into thin air. That is crazy lol. Anyone vote for keeping it till retirement?
I'd probably lock in the loss so you can use it to offset gains. Unlike most here, I don't think buying stocks is bad, although buying stocks without clearly understanding their financials is bad and many just randomly pick sticks.

FEDEX is interesting and you could always sell, wait 31 days, and if the stock hasn't done much, buy it again and hold long term. Of course you run the risk of it shooting up in that month. (If you aren't aware of it, there is something called a Wash rule that prevents you from selling a stock to take a loss and buying it again within 30 days.)

They've had some rough times due to Amazon playing hard ball. Amazon negotiates deeply discounted rates with shippers due to their huge volumes but FEDEX wouldn't go lower. Amazon over time has acquired (leased) a number of aircraft and trucks to do their own deliveries. I was reading a story yesterday where they have ~10-20% of the aircraft and trucks that FEDEX owns and the number is growing. I'm not sure if Amazon really wants to get into the delivery business long term but since shipping is such a huge percent of their costs they are determined to lower its cost.

I don't know the details but I'd speculate that because they lost Amazon's business, they are working hard not to lose any other contracts and may be giving those companies even larger discounts to stay in order not to look worse public relations wise.
TravelforFun
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Re: Huge loss on FDX single stock

Post by TravelforFun »

gomsoon wrote: Tue Dec 17, 2019 6:07 pm
livesoft wrote: Tue Dec 17, 2019 6:03 pm Sell all. If for some reason you realize any capital gains, then your loss will offset them. Up to $3,000 of excess remaining loss can then be used to offset ordinary (i.e. non-capital gain) income. Then the excess remaining loss gets carried over to next tax year where the process repeats.
It's really difficult for me to press that "Sell" button when my hard earned ~$9,000 is going to evaporate into thin air. That is crazy lol. Anyone vote for keeping it till retirement?
Would you buy more FDX today? If you wouldn't, then sell it.

TravelforFun
goblue100
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Re: Huge loss on FDX single stock

Post by goblue100 »

WoundedWing wrote: Thu Dec 19, 2019 2:44 am

You define finance the way you want. I would just say you are not seeing other patterns that are clearly there.
https://rationalwiki.org/wiki/Apophenia
Apophenia is the experience of seeing meaningful patterns or connections in random or meaningless data.
WoundedWing wrote: Thu Dec 19, 2019 2:44 am I intend to read more of the threads here when time allows but offhand I am kind of amazed this whole tribe exists without utilizing the strength that picking single stocks gives you. I think the OP has come to the wrong place for advice since you people don't use options, you don't even believe in single stock picks!
I'm going to guess that you will find that this place is not compatible with your beliefs. Our belief is that by the time you factor in:
1. Losses due to bad stock picks or bad timing or both
2. Tax inefficiency due to realized capital gains
3. Costs due to either margin or trading costs

You will find that you either do about the same or worse than a simple buy and hold in a tax efficient index fund. I'm sure you won't believe that, but those of us who identify as Bogleheads do.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
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F150HD
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Re: Huge loss on FDX single stock

Post by F150HD »

WoundedWing
- daytrading isn't the norm on this board, but as you do trade, keep posting, as it'll keep it interesting reading for the rest of us :greedy
There was a guy on here a year or two ago who actively traded....his posts were on point. He disappeared though (cannot recall his username)

OP - my 0.02 - I don't see FedEx disappearing....but, if you sell, sell by 12/31 so you can deduct 3k this year then next year which is right around the corner.
Long is the way and hard, that out of Hell leads up to light.
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Rowan Oak
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Re: Huge loss on FDX single stock

Post by Rowan Oak »

HomerJ wrote: Wed Dec 18, 2019 12:41 am
Momus wrote: Wed Dec 18, 2019 12:18 am I lost 20k on MED. I sold at $16/share, bought at $30/share.

7 years later, the same stock MED touched $250/share... lol
I bought GE around 35 or so in 2005.

It dropped to 8 in 2008...

Sold it around 18 in 2010.

Took 8 years to get back to 30 or so... And then crashed again and is at 11 today.

If I had stuck around waiting for it to get back to even, I'd still be waiting, still down a ton, and would have missed out on a 300% general stock market return with that money.

For every story where sticking it out would make you rich, there's another 5 stories where sticking it out keeps you poor. The odds make it far more likely to pick losers than winners.

It's not investing, it's gambling. And gambling with the odds against you. Buy the stock market index, and you'll get the market returns... No more, but no less.
This.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
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sperry8
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Re: Huge loss on FDX single stock

Post by sperry8 »

gomsoon wrote: Tue Dec 17, 2019 5:59 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yes. Lesson learned. I have most of my money in index funds. FDX is a good company I agree so I hesitant to just sell and take the loss now..
Sell and take the tax write off. Wait 31 days and buy it back again. It's highly unlikely it moves back up so you'll likely get it back then at a similar price. Then you can buy & hold it to get even and still get the tax write off. And remember, you must wait 31 days or it'll be considered a wash sale and you won't be able to use the tax loss as a write off
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HomerJ
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Re: Huge loss on FDX single stock

Post by HomerJ »

WoundedWing wrote: Thu Dec 19, 2019 2:44 amI'd disagree because when you buy in and out of a stock is everything. You can find a losing stock that has such an up and down pattern that if you just buy low and sell high you can make money. Using the RSI or Williams or both is the science.
This is incorrect.

You got lucky. You probably won't be lucky for the next 30 years straight.
Thanks to Jim I've had money double in several stocks. ARNC, YUMC come to mind. Timing is everything because I wouldn't touch ARNC now with a 10 foot pole.
Jim Cramer?? LOL. Come back in ten years, friend, and tell us how you did following Jim Cramer...

Many of us have been you. I guess a burned hand is the only way to learn for some people...

“There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.”

-Will Rogers.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
WoundedWing
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Re: Huge loss on FDX single stock

Post by WoundedWing »

You should be more welcoming to newcomers.
Last edited by WoundedWing on Fri Dec 20, 2019 9:45 am, edited 1 time in total.
Bulls make money, Bears make money & Pigs get Slaughtered. -- Jim Cramer
rossington
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Re: Huge loss on FDX single stock

Post by rossington »

HomerJ wrote: Wed Dec 18, 2019 12:41 am
Momus wrote: Wed Dec 18, 2019 12:18 am I lost 20k on MED. I sold at $16/share, bought at $30/share.

7 years later, the same stock MED touched $250/share... lol
I bought GE around 35 or so in 2005.

It dropped to 8 in 2008...

Sold it around 18 in 2010.

Took 8 years to get back to 30 or so... And then crashed again and is at 11 today.

If I had stuck around waiting for it to get back to even, I'd still be waiting, still down a ton, and would have missed out on a 300% general stock market return with that money.

For every story where sticking it out would make you rich, there's another 5 stories where sticking it out keeps you poor. The odds make it far more likely to pick losers than winners.

It's not investing, it's gambling. And gambling with the odds against you. Buy the stock market index, and you'll get the market returns... No more, but no less.
How many shares did you buy in '05?
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.
WoundedWing
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Re: Huge loss on FDX single stock

Post by WoundedWing »

here today gone tomorrow
Last edited by WoundedWing on Fri Dec 20, 2019 9:44 am, edited 1 time in total.
Bulls make money, Bears make money & Pigs get Slaughtered. -- Jim Cramer
Njm8845
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Re: Huge loss on FDX single stock

Post by Njm8845 »

gomsoon wrote: Tue Dec 17, 2019 5:37 pm Hey forum,

I'm looking for guidance.. I was playing with cash-secured put options contract earlier this year and was forced to buy 100 shares of Fedex (FDX) stock at $240 / share. Today after earnings I have unrealized loss of likely between $9,000 to $10,000. I don't need the money right now so I'm split between:

Option 1: Forget about the unrealized loss for now and keep the stock for the long term
Option 2: Sell, lesson learned, report the loss on tax return, move on with life

Thank you for your help!
most here are taking the line “this is why you don’t buy individual stocks.”

It seems the takeaway should be “don’t sell put options”
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Re: Huge loss on FDX single stock

Post by Njm8845 »

WoundedWing wrote: Fri Dec 20, 2019 2:36 am I've been burned. I came back from a $33k GE loss as I mentioned above. I expect 1-3 bad stocks/trades. But I did hundreds this past year and the gains are always greater.

Just out of curiousity I went to my broker page and counted. Turns out I traded my favorite stock 30 times this year. 60 buys and sales total. Don't people say you get good at some thing by doing it? BTW how many trades did you do this year?
60 buys and sells for 1 stock? That’s over 1 per week. How do you judge if they were a good or bad trade? I find it almost comical you claim to have only 3 “bad” trades out of hundreds.

Do you have data for what your % gain is for 2019?
WoundedWing
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Re: Huge loss on FDX single stock

Post by WoundedWing »

here today gone tomorrow
Last edited by WoundedWing on Fri Dec 20, 2019 9:43 am, edited 1 time in total.
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stickman731
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Re: Huge loss on FDX single stock

Post by stickman731 »

Clearly option 2.

The one thing I know about Fedex is I do not see their truck delivering packages in my neighborhood. In previous years, they were very common but now it is local logistic companies van. At this time of years, I see 4-5 per day usually 1-2 UPS trucks and USPS delivering packages.
1130Super
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Re: Huge loss on FDX single stock

Post by 1130Super »

Was Fedex a stock you wanted to own 100 shares at the strike price to begin with?
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RickBoglehead
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Re: Huge loss on FDX single stock

Post by RickBoglehead »

WoundedWing wrote: Fri Dec 20, 2019 3:56 am Now I know why you people don't trade. You can't even figure out good from bad. :mrgreen:
I'd suggest that you spend less time criticizing the philosophy of people on this forum and more time learning. If you read the Wiki, you'll see some books listed. The Bogleheads Guide to Investing, second edition, explains things clearly and consisely. Also read John Bogle's book, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits), 10th edition.

If you still don't agree with the investing philosophy after reading these books, then spend your energy learning more from Cramer, the founder of TheStreet.com, a miserable failure of a company by any measure. But don't chastise people for following their investing beliefs that you don't agree with.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
1130Super
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Re: Huge loss on FDX single stock

Post by 1130Super »

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Target2019
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Re: Huge loss on FDX single stock

Post by Target2019 »

WoundedWing wrote: Fri Dec 20, 2019 2:36 am Just out of curiousity I went to my broker page and counted. Turns out I traded my favorite stock 30 times this year. 60 buys and sales total. Don't people say you get good at some thing by doing it? BTW how many trades did you do this year?
I've invested in over 10,000 stocks and securities, and many of those are traded on a daily basis. I have people and computers do the trades for me.

I like to stop by and partake of the wisdom of over 90,000 forum members. I don't agree with everything people say, but then I don't disagree with everything either.

Sometimes we don't know as much as we think we know...just a bit of advice.
Njm8845
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Re: Huge loss on FDX single stock

Post by Njm8845 »

WoundedWing wrote: Fri Dec 20, 2019 3:56 am
Njm8845 wrote: Fri Dec 20, 2019 3:08 am
WoundedWing wrote: Fri Dec 20, 2019 2:36 am I've been burned. I came back from a $33k GE loss as I mentioned above. I expect 1-3 bad stocks/trades. But I did hundreds this past year and the gains are always greater.

Just out of curiousity I went to my broker page and counted. Turns out I traded my favorite stock 30 times this year. 60 buys and sales total. Don't people say you get good at some thing by doing it? BTW how many trades did you do this year?
60 buys and sells for 1 stock? That’s over 1 per week. How do you judge if they were a good or bad trade?
Now I know why you people don't trade. You can't even figure out good from bad. :mrgreen:
I was wondering if you considered it “good” if it only made money. Or if it made money after you took out trade fees and short term cap gains. Or if it made more money than if you had just bought and held.

I asked if you knew your percent gain over the year on this one stock. I was going to compare to what the stock has done YTD. If you made more money net fees and taxes than that buy and hold method, then congrats. But I still highly doubt you have a 97% success rate on your trades.
Njm8845
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Re: Huge loss on FDX single stock

Post by Njm8845 »

1130Super wrote: Fri Dec 20, 2019 6:30 am
Njm8845 wrote: Fri Dec 20, 2019 2:59 am
gomsoon wrote: Tue Dec 17, 2019 5:37 pm Hey forum,

I'm looking for guidance.. I was playing with cash-secured put options contract earlier this year and was forced to buy 100 shares of Fedex (FDX) stock at $240 / share. Today after earnings I have unrealized loss of likely between $9,000 to $10,000. I don't need the money right now so I'm split between:

Option 1: Forget about the unrealized loss for now and keep the stock for the long term
Option 2: Sell, lesson learned, report the loss on tax return, move on with life

Thank you for your help!
most here are taking the line “this is why you don’t buy individual stocks.”

It seems the takeaway should be “don’t sell put options”
Selling put options or covers calls can be a good way to earn income if you want to own something at a lower price but not current price or would sell something at a higher price

Example $1milion portfolio AA 60% stock(SPY),40% Bonds & Cash.
Spy goes down 10%, so now your portfolio is 57.4%/42.6% after drop
If you had sold cash covered put at strike 10% below current price
lets say it starts at $300 per share of Spy and it goes down 10% to 270, you get assigned 100 shares for 27k
your new AA is 60.3% stock/39.7% cash/bonds.
You can sell covers calls to automatically rebalance too Spy goes up to 330 you must sell 100 shares for 33k new AA 59.15%/40.85% if you would of done nothing your new AA would of been 63%/57%

You get to keep the premium if it doesn’t go up or down 10% in my scenarios and it automatically rebalances if equities drop or go up moderately. If I were to do this I would go out 6 months at a time and ladder them.

You earn about 4% in premiums a year doing both with a s&p 500 ETF not bad if you plan to rebalance when the market swings either way moderately
I don’t have a problem buying options, but I do have a problem selling them. Your downside isn’t protected. You can end up with a 10k loss like the OP. Obviously there are more complicated strategies, but I think it’s a pretty fair generalization to say “don’t play with options”
PolarInvest
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Re: Huge loss on FDX single stock

Post by PolarInvest »

WoundedWing wrote: Fri Dec 20, 2019 3:56 am
Njm8845 wrote: Fri Dec 20, 2019 3:08 am
WoundedWing wrote: Fri Dec 20, 2019 2:36 am I've been burned. I came back from a $33k GE loss as I mentioned above. I expect 1-3 bad stocks/trades. But I did hundreds this past year and the gains are always greater.

Just out of curiousity I went to my broker page and counted. Turns out I traded my favorite stock 30 times this year. 60 buys and sales total. Don't people say you get good at some thing by doing it? BTW how many trades did you do this year?
60 buys and sells for 1 stock? That’s over 1 per week. How do you judge if they were a good or bad trade?
Now I know why you people don't trade. You can't even figure out good from bad. :mrgreen:

Just curious why you are on an investment board about index investing going on about how you are a great day trader. I hope you succeed, but honestly don't care very much either way, and I suspect most on this board don't either. It sounds like you are little insecure about your strategy and trying prove something to yourself by insulting people here to prove what a great trader you are?
WoundedWing
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Re: Huge loss on FDX single stock

Post by WoundedWing »

PolarInvest wrote: Fri Dec 20, 2019 8:52 am
WoundedWing wrote: Fri Dec 20, 2019 3:56 am
Njm8845 wrote: Fri Dec 20, 2019 3:08 am
WoundedWing wrote: Fri Dec 20, 2019 2:36 am I've been burned. I came back from a $33k GE loss as I mentioned above. I expect 1-3 bad stocks/trades. But I did hundreds this past year and the gains are always greater.

Just out of curiousity I went to my broker page and counted. Turns out I traded my favorite stock 30 times this year. 60 buys and sales total. Don't people say you get good at some thing by doing it? BTW how many trades did you do this year?
60 buys and sells for 1 stock? That’s over 1 per week. How do you judge if they were a good or bad trade?
Now I know why you people don't trade. You can't even figure out good from bad. :mrgreen:

Just curious why you are on an investment board about index investing going on about how you are a great day trader. I hope you succeed, but honestly don't care very much either way, and I suspect most on this board don't either. It sounds like you are little insecure about your strategy and trying prove something to yourself by insulting people here to prove what a great trader you are?
Where exactly did I say I daytrade?

I did not say that. I have specifically said many times I do not play options or daytrade. [Comment removed by moderator oldcomputerguy]
Bulls make money, Bears make money & Pigs get Slaughtered. -- Jim Cramer
Dottie57
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Re: Huge loss on FDX single stock

Post by Dottie57 »

WoundedWing wrote: Thu Dec 19, 2019 2:44 am
prudent wrote: Wed Dec 18, 2019 7:37 am
WoundedWing wrote: Wed Dec 18, 2019 4:21 am I only buy single stocks. ( I am only here trying to figure out what a Boglehead is. )
WoundedWing, welcome!

The Boglehead investing philosophy is essentially:
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Diversify
*Never try to time the market*
Use index funds when possible
Keep costs low
Minimize taxes
Invest with simplicity
Stay the course

There's much more detail and elaboration in our great wiki .
What year was that written that you should never try to time the market? Does that include timing individual stocks? What about stocks like CAT and CMI that are known as cyclicals? Why wouldn't you take advantage of a stock that exists and is publically known as a cyclical stock? Isn't acknowledge of its pattern the same as a way to not bear too much risk?

Because we are in a modern era of cheap computers and cheap processing power. I believe most people can identify more advanced patterns if they just do the research.

If you want the secret sauce I don't believe in greed and I don't believe I am going to hurt my ability to make my own money so I will share it with you: I use the RSI and the Williams %R to help me buy in and out of individual stocks. I suppose you might say I am timing the market but really I am timing a single stock. Even in these last few months when MA barely moved I bought in and out of it and made almost $10K doing so. I have a page and a half of trades on it. No options, just long equity positions. No daytrades.

@1789:

2) Math has nothing to do with investing skills. Because finance is not a science like that. Remember Newton invented “Calculus” but he failed in investing.
I'd disagree because when you buy in and out of a stock is everything. You can find a losing stock that has such an up and down pattern that if you just buy low and sell high you can make money. Using the RSI or Williams or both is the science. I've locked in huge gains in medical stocks because of their great volatility even though in the end some of them never really went anywhere. KISS - buy low, sell high. I would postulate they have great momentum when they do move and that identifying these stocks is part of the science.

You define finance the way you want. I would just say you are not seeing other patterns that are clearly there. The bottom line is always your buy order price and your sell order price which is why I do almost everything by limit orders so I can bargain for the right price. I can't see how you can say a field full of #s has nothing to do with math. It revolves around math. Why wouldn't you apply all the math you can? Newton wasn't around when the stock market even existed so that's a moot point. (even a quick read through wikipedia's page on newton reveals nothing about him investing and it follows that just because a man is great in one topic that he may be poor in others.)

Oh, I know Cramer gets a lot of hate. All you have to do is look at the comment section in youtube and you also see all kinds of people spouting "The Sky is Falling" every single day but I doubt any of those people are his AAP customers who see the real Jim Cramer investinglike I do. The original poster of this thread is in the process of realization that is Cramer's every day motto "Bulls make money, bears make money, and pigs get slaughtered." and he'd probably do better to have Cramer mentor him. It's sure a cheap yearly subscription price compared to huge stock losses. That's why I mention Jim. He has very sensible rules to help keep one's own stock investing in check. (get on his site and I think you can get his 25 rules of investing free as a download)

I intend to read more of the threads here when time allows but offhand I am kind of amazed this whole tribe exists without utilizing the strength that picking single stocks gives you. I think the OP has come to the wrong place for advice since you people don't use options, you don't even believe in single stock picks!

I just don't know how you can think that way. Thanks to Jim I've had money double in several stocks. ARNC, YUMC come to mind. Timing is everything because I wouldn't touch ARNC now with a 10 foot pole.

I just checked his portfolio and Jim isn't in FDX or any of the delivery companies unless you count AMZN.

But it is work. It takes time. Even his trading rules can be a lot to keep in your mind at one time when you enthusiastically get involved in buying and selling. It's a lot of self-discipline which is also why I think the OP can benefit from Jim as he is already asking the right questions in order to know how to move on the best possible way.

You are in the wrong forum if you believe moving in and out of stocks is a math problem.
Nowizard
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Re: Huge loss on FDX single stock

Post by Nowizard »

Sell and repurchase if you feel it is a temporary downturn. Though purchasing very limited stocks, only owning one currently, we are watching FDX and will quite possibly purchase its stock when receiving an upcoming, January cash increase. FDX has a history of making necessary changes. One reason for the downturn is the "Purple Promise' where they take short-term losses rather than making draconian cuts with employees. They are making large investments in upgrades to sorting facilities, purchasing new aircraft, but will be taking write-offs for retirement of older aircraft. That may not be the take of some, but it is ours.

Tim
2commaBH
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Re: Huge loss on FDX single stock

Post by 2commaBH »

Another vote for sell so that you can TLH and deploy the capital elsewhere. Otherwise, you will go nuts watching FDX slowly and painfully go back up to your break-even price over the next very many years. Or even, worse, it won't. But even if it does, think of the opportunity cost lost (and I can almost guarantee you that the minute it hits $240 or thereabouts, you'll sell, which compounds the problem).

Unlike most others here, I do play around with individual stocks (and options) sometimes, emphasis on "play". I enjoy it and have done fine. But I only do it in companies I understand (and as someone else mentioned) very rarely with unlimited downside risk as you did. The biggest risk (beyond lack of information) to playing with stocks and options is the emotional reactions to trading. I speculate that you have taken such a "huge" loss on FDX will prevent you from viewing it clearly from this point on. I would find something else to trade if that's your desire.

Full disclosure: I bought some shares of FDX after the latest earnings drop and am hoping to make a quick buck, but I wouldn't ever wait until $240 to sell. :)
totallystudly
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Re: Huge loss on FDX single stock

Post by totallystudly »

[/quote]

most here are taking the line “this is why you don’t buy individual stocks.”

It seems the takeaway should be “don’t sell put options”
[/quote]

Nothing inherently wrong with selling cash secured puts...same risk profile as covered calls and it is better than sitting around with a limit order...and slightly less risky than owning the underlying
vipertom1970
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Re: Huge loss on FDX single stock

Post by vipertom1970 »

Every good company misses a quarter once in a while so people take profit and run but you got to look at the fundamentals of the company going forward. I used to double down and came out way ahead at the end many times.
Topic Author
gomsoon
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Re: Huge loss on FDX single stock

Post by gomsoon »

vipertom1970 wrote: Fri Dec 20, 2019 11:49 pm Every good company misses a quarter once in a while so people take profit and run but you got to look at the fundamentals of the company going forward. I used to double down and came out way ahead at the end many times.
I'm the OP and just wanted to give an update. I was assigned FDX stock at $240 / share because of cash-secured puts then stock plummeted to $90 / share and I had significant paper loss. I asked for boglehead advice and majority said to sell. I sold 10 shares when it bounced back to around $180 / share and kept rest of 90 shares and was getting dividends reinvested. Today after earnings report FDX aftermarket is > $250 / share. I'm certain I got super lucky that the stock bounced back but man I'm glad I didn't sell all the shares. Even after accounting for losses after selling those 10 shares, I'll probably break even or come out ahead. :sharebeer
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?

It seems like your investment account is "relatively modest" so a loss of $10K seems big percentage wise. I was in the same situation years ago where a $5K paper loss was enough to induce anxiety and stress. Nowadays being down $10K or $20K is "normal" for me.

To give you a real life example, back in 2010's something, I got myself shares of YNDX, $35k invested. Then during the many years that followed, I believe I was down 50% or even more than that with that stock at some point. I was tempted to sell it because like other posters here said, "sell it and move on". However, applying the 3 questions above, 1) No, 2) Good, 3) Yes, I decided to forget about it and let it ride. Fast forward to this year, I was able to sell it with a cap gain of $10K. Not as great a return as I was hoping for, but a cap gain nonetheless.

So ask yourself those 3 questions and make your decision before rushing into selling.
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gomsoon
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Re: Huge loss on FDX single stock

Post by gomsoon »

GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?

It seems like your investment account is "relatively modest" so a loss of $10K seems big percentage wise. I was in the same situation years ago where a $5K paper loss was enough to induce anxiety and stress. Nowadays being down $10K or $20K is "normal" for me.

To give you a real life example, back in 2010's something, I got myself shares of YNDX, $35k invested. Then during the many years that followed, I believe I was down 50% or even more than that with that stock at some point. I was tempted to sell it because like other posters here said, "sell it and move on". However, applying the 3 questions above, 1) No, 2) Good, 3) Yes, I decided to forget about it and let it ride. Fast forward to this year, I was able to sell it with a cap gain of $10K. Not as great a return as I was hoping for, but a cap gain nonetheless.

So ask yourself those 3 questions and make your decision before rushing into selling.
No I did not sell. Just like you said I didn't need that money immediately so I just kept it from Dec 2019 till now. But I don't want to have $25K sitting in 1 stock. I'll probably sell tomorrow and move it to VTI
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grabiner
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Re: Huge loss on FDX single stock

Post by grabiner »

GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?
The missing question: What do you know about question #2 that nobody else knows?

Or another way to look at it: How much of my portfolio should I invest in this stock? If you hold the stock, and I buy an equal amount, I will have the same return as you. Therefore, unless every other investor should be buying more, it makes sense for you to sell.

A further argument for you to sell is the tax situation. If the stock is just as good as any other stock, then you will have the same pre-tax expected return whether you hold or sell, but better after-tax returns if you sell because of the capital loss. (Edit: This argument would have been right for the original decision to sell, but is wrong now because the stock has a small capital gain.)
Last edited by grabiner on Tue Sep 15, 2020 10:54 pm, edited 1 time in total.
Wiki David Grabiner
Jwulgaru
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Re: Huge loss on FDX single stock

Post by Jwulgaru »

FDX is up 8% after hours today, so good thing you didn't sell.
countdrak
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Re: Huge loss on FDX single stock

Post by countdrak »

gomsoon wrote: Tue Sep 15, 2020 3:57 pm
GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?

It seems like your investment account is "relatively modest" so a loss of $10K seems big percentage wise. I was in the same situation years ago where a $5K paper loss was enough to induce anxiety and stress. Nowadays being down $10K or $20K is "normal" for me.

To give you a real life example, back in 2010's something, I got myself shares of YNDX, $35k invested. Then during the many years that followed, I believe I was down 50% or even more than that with that stock at some point. I was tempted to sell it because like other posters here said, "sell it and move on". However, applying the 3 questions above, 1) No, 2) Good, 3) Yes, I decided to forget about it and let it ride. Fast forward to this year, I was able to sell it with a cap gain of $10K. Not as great a return as I was hoping for, but a cap gain nonetheless.

So ask yourself those 3 questions and make your decision before rushing into selling.
No I did not sell. Just like you said I didn't need that money immediately so I just kept it from Dec 2019 till now. But I don't want to have $25K sitting in 1 stock. I'll probably sell tomorrow and move it to VTI

Imagine if you would have done the “wheel strategy” for the past 8 months :) You said “cash secured puts, assuming you were dabbling in options. You could have sold out of the money covered calls for 8 months straight and reduced your ownership cost even further ! Wrong forum for option strategies. 😉 , but there are tons of ways of saving a bad option trade. Stock is at $255 AH, hope you can make some profit!
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

grabiner wrote: Tue Sep 15, 2020 8:20 pm
GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?
The missing question: What do you know about question #2 that nobody else knows?

Or another way to look at it: How much of my portfolio should I invest in this stock? If you hold the stock, and I buy an equal amount, I will have the same return as you. Therefore, unless every other investor should be buying more, it makes sense for you to sell.

A further argument for you to sell is the tax situation. If the stock is just as good as any other stock, then you will have the same pre-tax expected return whether you hold or sell, but better after-tax returns if you sell because of the capital loss.
For question number 2, it would be similar to the favorite boglehead investment vehicle of choice, the mutual funds. What do you know about one type of funds to pickb international vs. Domestic, large cap vs. Small cap, etc. I guess you would say analysis. Same here. Analysis.
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grabiner
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Re: Huge loss on FDX single stock

Post by grabiner »

GoldenGoose wrote: Tue Sep 15, 2020 10:23 pm
grabiner wrote: Tue Sep 15, 2020 8:20 pm
GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?
The missing question: What do you know about question #2 that nobody else knows?

Or another way to look at it: How much of my portfolio should I invest in this stock? If you hold the stock, and I buy an equal amount, I will have the same return as you. Therefore, unless every other investor should be buying more, it makes sense for you to sell.

A further argument for you to sell is the tax situation. If the stock is just as good as any other stock, then you will have the same pre-tax expected return whether you hold or sell, but better after-tax returns if you sell because of the capital loss. (Edit: This argument would have been right for the original decision to sell, but is wrong now because the stock has a small capital gain.)
For question number 2, it would be similar to the favorite boglehead investment vehicle of choice, the mutual funds. What do you know about one type of funds to pickb international vs. Domestic, large cap vs. Small cap, etc. I guess you would say analysis. Same here. Analysis.
I actually agree with this argument in general. I do expect value stocks to outperform growth stocks, but only because of additional risk, particularly during economic downturns. I overweight value stocks because I choose to take risk by holding riskier stock rather than more stock.

The difference between this and the single-stock situation is that the known costs of holding a single stock are greater. There is significantly more risk in overweighting a single stock than a broad segment of the market. And if a single stock has a capital loss (which the OP's stock no longer does), then there is a guaranteed return for getting rid of it. (If a segment of the market has a loss, you don't need to get rid of it; you can sell one international stock fund for a capital loss and buy another international stock fund.)

The other factor is that most decisions whether to hold a single stock which come up on the Bogleheads forum are not based on analysis, but on psychological biases such as anchoring, endowment effect, and loss aversion. It is common for investors who discuss the potential benefits of international investing both to hold international stock and to recommend it to others; it is rare for investors holding individual stock to recommend that others buy it.
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Re: Huge loss on FDX single stock

Post by Valuethinker »

gomsoon wrote: Tue Dec 17, 2019 5:37 pm Hey forum,

I'm looking for guidance.. I was playing with cash-secured put options contract earlier this year and was forced to buy 100 shares of Fedex (FDX) stock at $240 / share. Today after earnings I have unrealized loss of likely between $9,000 to $10,000. I don't need the money right now so I'm split between:

Option 1: Forget about the unrealized loss for now and keep the stock for the long term
Option 2: Sell, lesson learned, report the loss on tax return, move on with life

Thank you for your help!
Would you buy FedEx at this stock price?

If so, buy more.

Otherwise, sell.
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

grabiner wrote: Tue Sep 15, 2020 10:54 pm
GoldenGoose wrote: Tue Sep 15, 2020 10:23 pm
grabiner wrote: Tue Sep 15, 2020 8:20 pm
GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?
The missing question: What do you know about question #2 that nobody else knows?

Or another way to look at it: How much of my portfolio should I invest in this stock? If you hold the stock, and I buy an equal amount, I will have the same return as you. Therefore, unless every other investor should be buying more, it makes sense for you to sell.

A further argument for you to sell is the tax situation. If the stock is just as good as any other stock, then you will have the same pre-tax expected return whether you hold or sell, but better after-tax returns if you sell because of the capital loss. (Edit: This argument would have been right for the original decision to sell, but is wrong now because the stock has a small capital gain.)
For question number 2, it would be similar to the favorite boglehead investment vehicle of choice, the mutual funds. What do you know about one type of funds to pickb international vs. Domestic, large cap vs. Small cap, etc. I guess you would say analysis. Same here. Analysis.
I actually agree with this argument in general. I do expect value stocks to outperform growth stocks, but only because of additional risk, particularly during economic downturns. I overweight value stocks because I choose to take risk by holding riskier stock rather than more stock.

The difference between this and the single-stock situation is that the known costs of holding a single stock are greater. There is significantly more risk in overweighting a single stock than a broad segment of the market. And if a single stock has a capital loss (which the OP's stock no longer does), then there is a guaranteed return for getting rid of it. (If a segment of the market has a loss, you don't need to get rid of it; you can sell one international stock fund for a capital loss and buy another international stock fund.)

The other factor is that most decisions whether to hold a single stock which come up on the Bogleheads forum are not based on analysis, but on psychological biases such as anchoring, endowment effect, and loss aversion. It is common for investors who discuss the potential benefits of international investing both to hold international stock and to recommend it to others; it is rare for investors holding individual stock to recommend that others buy it.
So what is one's personal goal? Low return low risk OR high return high risk? If anyone can find an investment that has a highest return with the lowest risk, please let me and only me know personally know. I would love to invest in that.

Investing in a mutual fund is not a guarantee of making money. If you pick the wrong fund and your return is subpar and can't keep up with inflation, you would be losing money, even though you didn't have any capital loss.
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

gomsoon wrote: Tue Sep 15, 2020 3:57 pm
GoldenGoose wrote: Tue Sep 15, 2020 3:48 pm Did you sell yet? If not then hear me out.

It seems like the chorus of "sell" is loud. However before you rush into selling a loser stock, ask yourself these questions:

1. Do you need the money now or in the very near future?
2. How does the outlook of the company look?
3. If the company goes bankrupt, can you afford to absorb the loss without major financial impact?

It seems like your investment account is "relatively modest" so a loss of $10K seems big percentage wise. I was in the same situation years ago where a $5K paper loss was enough to induce anxiety and stress. Nowadays being down $10K or $20K is "normal" for me.

To give you a real life example, back in 2010's something, I got myself shares of YNDX, $35k invested. Then during the many years that followed, I believe I was down 50% or even more than that with that stock at some point. I was tempted to sell it because like other posters here said, "sell it and move on". However, applying the 3 questions above, 1) No, 2) Good, 3) Yes, I decided to forget about it and let it ride. Fast forward to this year, I was able to sell it with a cap gain of $10K. Not as great a return as I was hoping for, but a cap gain nonetheless.

So ask yourself those 3 questions and make your decision before rushing into selling.

No I did not sell. Just like you said I didn't need that money immediately so I just kept it from Dec 2019 till now. But I don't want to have $25K sitting in 1 stock. I'll probably sell tomorrow and move it to VTI
I have no personal opinion with FDX so I can't say if selling all of it was a good move or not. I know that the noises out there indicating that the traditional shipping companies are facing increasing competition from newcomers like AMZN or WMT or new trends like e-documents. I can't tell how this trend is going to affect UPS or FDX in the future, but if I could do a good analysis and see that it will not affect FDX, I would hold it.
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

OP, what made you get into FDX in the first place?
Nowizard
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Re: Huge loss on FDX single stock

Post by Nowizard »

Tougher still when you look at their YTD increase of +50%

Tim
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

PolarInvest wrote: Fri Dec 20, 2019 8:52 am
WoundedWing wrote: Fri Dec 20, 2019 3:56 am
Njm8845 wrote: Fri Dec 20, 2019 3:08 am
WoundedWing wrote: Fri Dec 20, 2019 2:36 am I've been burned. I came back from a $33k GE loss as I mentioned above. I expect 1-3 bad stocks/trades. But I did hundreds this past year and the gains are always greater.

Just out of curiousity I went to my broker page and counted. Turns out I traded my favorite stock 30 times this year. 60 buys and sales total. Don't people say you get good at some thing by doing it? BTW how many trades did you do this year?
60 buys and sells for 1 stock? That’s over 1 per week. How do you judge if they were a good or bad trade?
Now I know why you people don't trade. You can't even figure out good from bad. :mrgreen:

Just curious why you are on an investment board about index investing going on about how you are a great day trader. I hope you succeed, but honestly don't care very much either way, and I suspect most on this board don't either. It sounds like you are little insecure about your strategy and trying prove something to yourself by insulting people here to prove what a great trader you are?
I'm interested. I bet other people are interested too. If someone has a secret to make more money than your mutual funds, don't you want to hear it? Why investing has to be only certain way and not anyway possible to maximize your gains?
rkhusky
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Re: Huge loss on FDX single stock

Post by rkhusky »

OP could have sold FDX last year and bought VTSAX. Then after 30 days could have rebought FDX if doing so was favorable, ie Tax Loss Harvest. Claim the loss and tax break and perhaps maintain the position to see if it jumped back up in the future.
GoldenGoose
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Re: Huge loss on FDX single stock

Post by GoldenGoose »

But that would be market timing and you know, that's a fatal sin around here.
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