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Topic: Apple?
How are your investment clubs handling the recent run up in Apple Stock price?

The Challenge club last night voted down two motions to put a trailing stop loss order on their shares. They also voted against purchasing more shares.

Trefis has a valuation of $550 on the stock with a very interesting writeup of how the balance of the different Apple businesses contribute to that:

Trefis Apple Analysis

For those of you interested in learning about why you might want to trade options, I thought this article had some really interesting ideas about using them to protect your downside risk in Apple:

How To Play an Apple Pullback

So what are you doing? Selling? Trailing Stop Loss Orders? Options?


Laurie Frederiksen
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We own 16 shares of Apple.  Our club typically puts a 25% trailing stop on all of our stocks.  In January I was looking at Apple and we had about $1,800 in unrealized gains but our trailing stop had us at a $200+ loss if the stock were to drop and trigger the trailing stop. I thought that that was too much to leave on the table so we moved the trailing stop up to 15% to at least have a profit if it sold.  A couple of days later Apple began this great run.  The 15% trailing stop is giving us nearly a $3000 profit now.  I would assume that we will discuss and approve a vote at our next meeting to put the trailing stop back to 25% since Apple is a strong stock and it will still give us a good profit.
 
John Rice
ABODI Investment Club


From: Laurie Frederiksen <laurie@bivio.biz>
To: The Club Cafe <club_cafe@bivio.com>
Sent: Wed, March 21, 2012 9:35:59 AM
Subject: [club_cafe] Apple?

How are your investment clubs handling the recent run up in Apple Stock price? 

The Challenge club last night voted down two motions to put a trailing stop loss order on their shares.  They also voted against purchasing more shares.

Trefis has a valuation of $550 on the stock with a very interesting writeup of how the balance of the different Apple businesses contribute to that:

Trefis Apple Analysis

For those of you interested in learning about why you might want to trade options,  I thought this article had some really interesting ideas about using them to protect your downside risk in Apple:

How To Play an Apple Pullback

So what are you doing?  Selling?  Trailing Stop Loss Orders?  Options?


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio


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John,

How do you pick 25% as a trailing stop set point? When I start to think about that, it always seems to me that if I'm going to be OK with the stock going down 25%, I might as well just sell it where it is and than decide whether to repurchase it later if it does drop.

But I also know if you set a stop too tight, it's probably guaranteed it's going to trigger.


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio


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Subscribe to the Club Cafe email list. Click here to Unsubscribe



On Wed, Mar 21, 2012 at 1:04 PM, John Rice wrote:
We own 16 shares of Apple. Our club typically puts a 25% trailing stop on all of our stocks.In January I was looking at Apple and we had about $1,800 in unrealized gains but our trailing stop had us at a $200+ loss if the stock were to drop and trigger the trailing stop.I thought that that was too much to leave on the table so we moved the trailing stop up to 15% to at least have a profit if it sold. A couple of days later Apple began this great run. The 15% trailing stop is giving us nearly a $3000 profit now. I would assume that we will discuss and approve a vote at our next meeting to put the trailing stop back to 25% since Apple is a strong stock and it will still give us a good profit.
John Rice
ABODI Investment Club


From: Laurie Frederiksen <laurie@bivio.biz>
To: The Club Cafe <club_cafe@bivio.com>
Sent: Wed, March 21, 2012 9:35:59 AM
Subject: [club_cafe] Apple?

How are your investment clubs handling the recent run up in Apple Stock price?

The Challenge club last night voted down two motions to put a trailing stop loss order on their shares. They also voted against purchasing more shares.

Trefis has a valuation of $550 on the stock with a very interesting writeup of how the balance of the different Apple businesses contribute to that:

Trefis Apple Analysis

For those of you interested in learning about why you might want to trade options, I thought this article had some really interesting ideas about using them to protect your downside risk in Apple:

How To Play an Apple Pullback

So what are you doing? Selling? Trailing Stop Loss Orders? Options?


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio


Click here to
Subscribe to the Club Cafe email list. Click here to Unsubscribe


Laurie, Do you record Challenge Club presentations?  (I was unable to find any on the website.)  I was not able to watch last light, but would like to hear the discussion regarding stop losses.  Thanks,

Roy Chastain


“Little by little, I am learning the art of being quite content with doing very little slowly.”  

Lionel Hardcastle in “As Time Goes By"



--- On Wed, 3/21/12, Laurie Frederiksen <laurie@bivio.biz> wrote:

From: Laurie Frederiksen <laurie@bivio.biz>
Subject: [club_cafe] Apple?
To: "The Club Cafe" <club_cafe@bivio.com>
Date: Wednesday, March 21, 2012, 9:35 AM

How are your investment clubs handling the recent run up in Apple Stock price? 

The Challenge club last night voted down two motions to put a trailing stop loss order on their shares.  They also voted against purchasing more shares.

Trefis has a valuation of $550 on the stock with a very interesting writeup of how the balance of the different Apple businesses contribute to that:

Trefis Apple Analysis

For those of you interested in learning about why you might want to trade options,  I thought this article had some really interesting ideas about using them to protect your downside risk in Apple:

How To Play an Apple Pullback

So what are you doing?  Selling?  Trailing Stop Loss Orders?  Options?


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio


Click here to
Subscribe to the Club Cafe email list.  Click here to  Unsubscribe

How are they handling it? You mean other than sitting there,
paralized, not beleiveing our good fortune? (Annualized IRR
is >70%)

We've begun discussing rebalancing, and trimming back AAPL
as a % of our portfolio, but have not agreed upon an
adequate replacement that's not also in tech.

Thank goodness no one in our club has suggested a stop-loss.
If we feel we have won this particular lottery, we need to
sell and invest in something else, not sit on our hands
waiting for it to drop 15-25%.
Hi Roy,

Unfortunately, last nights session was not recorded. Manifest Investing does not always record the meetings.

There is a discussion going on in their Challenge Club forum however. You might get some ideas there.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio


Click here to
Subscribe to the Club Cafe email list. Click here to Unsubscribe



On Wed, Mar 21, 2012 at 1:42 PM, Roy Chastain wrote:
Laurie, Do you record Challenge Club presentations? (I was unable to find any on the website.) I was not able to watch last light, but would like to hear the discussion regarding stop losses. Thanks,

Roy Chastain


The reason that we started using trailing stops is out of fear of our economy collapsing.  A good stock can drop 10-15% temporarily due to the overall economy and recover quickly.  For a short time we had done 10% but we had multiple stocks sell when we didn't want them to sell.  Also, since we meet only once a month we were concerned about responding to what happens between meetings if a stock starts dropping soon after a meeting due to something seriously changing in the company.  For example Netflix last year. It dropped 55% from the end of August($241.88) to the end of September ($107.63).  I am curious how other clubs handle major situations that happen between meeting which greatly affect the stock price.  The 25% trailing stop is probably not the best way to handle it but it is something that is concrete and there is no one to blame for their action or inaction is these situations.
 
John Rice
ABODI Investment Club (A Bunch Of Dummies Investing)


From: Laurie Frederiksen <laurie@bivio.biz>
To: club_cafe@bivio.com
Sent: Wed, March 21, 2012 10:37:38 AM
Subject: Re: [club_cafe] Apple?

John,

How do you pick 25% as a trailing stop set point?  When I start to think about that, it always seems to me that if I'm going to be OK with the stock going down 25%,  I might as well just sell it where it is and than decide whether to repurchase it later if it does drop.

But I also know if you set a stop too tight,  it's probably guaranteed it's going to trigger.


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio


Click here to
Subscribe to the Club Cafe email list.  Click here to  Unsubscribe



On Wed, Mar 21, 2012 at 1:04 PM, John Rice  wrote:
We own 16 shares of Apple.  Our club typically puts a 25% trailing stop on all of our stocks.  In January I was looking at Apple and we had about $1,800 in unrealized gains but our trailing stop had us at a $200+ loss if the stock were to drop and trigger the trailing stop. I thought that that was too much to leave on the table so we moved the trailing stop up to 15% to at least have a profit if it sold.  A couple of days later Apple began this great run.  The 15% trailing stop is giving us nearly a $3000 profit now.  I would assume that we will discuss and approve a vote at our next meeting to put the trailing stop back to 25% since Apple is a strong stock and it will still give us a good profit.
 
John Rice
ABODI Investment Club


From: Laurie Frederiksen <laurie@bivio.biz>
To: The Club Cafe <club_cafe@bivio.com>
Sent: Wed, March 21, 2012 9:35:59 AM
Subject: [club_cafe] Apple?

How are your investment clubs handling the recent run up in Apple Stock price? 

The Challenge club last night voted down two motions to put a trailing stop loss order on their shares.  They also voted against purchasing more shares.

Trefis has a valuation of $550 on the stock with a very interesting writeup of how the balance of the different Apple businesses contribute to that:

Trefis Apple Analysis

For those of you interested in learning about why you might want to trade options,  I thought this article had some really interesting ideas about using them to protect your downside risk in Apple:

How To Play an Apple Pullback

So what are you doing?  Selling?  Trailing Stop Loss Orders?  Options?


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio


Click here to
Subscribe to the Club Cafe email list.  Click here to  Unsubscribe


Well, I saw a few comments, but nothing yet has caused me to change.  From the dearth of comments, it would appear that not many clubs use stop losses.  Neither of my clubs use them.  

I saw one comment that used 25% as a stop loss.  I could be mistaken, but as long as the fundamentals are good, wouldn’t such an event present a great buying opportunity?  While we might get caught holding a stock that experiences the negative impact of a Black Swan, we didn’t get caught in the Flash Crash.  We believe that we want to make the choice of when to sell, and so far haven’t seen the wisdom of using stop losses.  What are we missing?

Further, I keep seeing the advice that when a quality company is too expensive, to put it on a Watch (Pounce) List for purchasing after a price drop.  I took advantage of that advice last July & August, and it worked well for 4 out of 5 of my buys.  Later, I sold some to replenish my emergency cash fund, leaving others to continue the ride (i.e., Apple).  Is this theory at variance with stop loss theories?

Roy Chastain


“Little by little, I am learning the art of being quite content with doing very little slowly.”  

Lionel Hardcastle in “As Time Goes By"



--- On Wed, 3/21/12, Laurie Frederiksen <laurie@bivio.biz> wrote:

Hi Roy,

Unfortunately,  last nights session was not recorded.  Manifest Investing does not always record the meetings.

There is a discussion going on in their Challenge Club forum however.  You might get some ideas there.

Laurie Frederiksen
Invest with your friends!
www.bivio.com



On Wed, Mar 21, 2012 at 1:42 PM, Roy Chastain  wrote:
Laurie, Do you record Challenge Club presentations?  (I was unable to find any on the website.)  I was not able to watch last light, but would like to hear the discussion regarding stop losses.  Thanks,

Roy Chastain


With a $4.50 cost basis in Apple, we are not too concerned.
It is an outsized part of the portfolio now, but that is not
a bad place to be in. In 1999-2000 we used 10 percent stop
losses on most stocks, primarily due to the run up in
everything and the insane valuations. Worked out well then.

We think the $550 valuation is a little low, so are willing
to take more risk now, and the dividend is only a sweetener.

I guess you could sum up our philosophy on stop losses as
"they are extremely useful in a bubble/emotional market in
either forcing the sale or forcing a decision." While
individual stocks might fit the bill today, we don't think
the market as a whole does.
Another thing to beware of if you are setting stop losses on stocks is wash sales.

If you have wash sales in bivio, you need to contact us to make manual adjustments in your records so that your capital gains are reported correctly. These entries can get very complex if you've had multiple transactions in a stock.

I just spent quite a bit of time with a club that had repeated monthly stock sales because they had set blanket stop losses on all their stocks. They stop points were pretty tight and they kept getting stopped out of stocks they really liked and repurchasing them quickly after they sold them.

If the sales produced a loss and the stocks were repurchased within 30 days, it created a lot of wash sales they had to account for. Some of their disallowed losses were for last year, which means they had under-reported their capital gains and need to file an amended 2010 return.

Something to keep in mind if you're repurchasing quickly after you've had an automatic sell like a stop loss trigger.


Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio


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Subscribe to the Club Cafe email list. Click here to Unsubscribe



On Thu, Mar 22, 2012 at 4:41 PM, Russell J. Hanks wrote:
With a $4.50 cost basis in Apple, we are not too concerned.
It is an outsized part of the portfolio now, but that is not
a bad place to be in. In 1999-2000 we used 10 percent stop
losses on most stocks, primarily due to the run up in
everything and the insane valuations. Worked out well then.

We think the $550 valuation is a little low, so are willing
to take more risk now, and the dividend is only a sweetener.

I guess you could sum up our philosophy on stop losses as
"they are extremely useful in a bubble/emotional market in
either forcing the sale or forcing a decision." While
individual stocks might fit the bill today, we don't think
the market as a whole does.

Russell, Thank you for passing along your experience and thoughts.

Roy Chastain


“Little by little, I am learning the art of being quite content with doing very little slowly.”  

Lionel Hardcastle in “As Time Goes By"



--- On Thu, 3/22/12, Russell J. Hanks <russhanks@mac.com> wrote:

With a $4.50 cost basis in Apple, {Wow!  Back in those days I was sure Apple was going to fail.  I had bought a used IIe and couldn’t match what I could do on my work Dell.  In fact, at home I ended up using my Selectric II for all my correspondence.}

 In 1999-2000 we used 10 percent stop
losses on most stocks, primarily due to the run up in
everything and the insane valuations.  Worked out well then.  {I’m glad.  I take it most of your stock got sold @ -10% in 2000, when Tech crashed?}

We think the $550 valuation is a little low, so are willing
to take more risk now, and the dividend is only a sweetener.

I guess you could sum up our philosophy on stop losses as
"they are extremely useful in a bubble/emotional market in
either forcing the sale or forcing a decision."  While
individual stocks might fit the bill today, we don't think
the market as a whole does.  {Thank you.  I’ll ponder over this.  Roy}
Russell,

> With a $4.50 cost basis in Apple, we are not too concerned.

I don't understand this, or, at the very least, I don't subscribe to it.
What does your cost basis have to do with anything? A decrease in Apple's
price from present levels is a real loss, and the fact that you still end up
showing a gain from your original investment has nothing to do with it.

Rip West