“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”
― Albert Einstein
Benjamin Graham had spent his life establishing his basic criterion for buying and selling stocks. In a nutshell, his rules for selling stocks are:
1. Sell after your stock has gone up 50 percent; or
2. Sell after two years, whichever comes first.
3. Sell if the dividend is omitted.
4. Sell when earnings decline so far that the current market price is 50 percent over the new target buying price.
I am not a big fan of #1 and #2. However, I do give a good weight for #3 and #4.
Apparently, time and again, Stock market shows who is the real boss in the Market. I have to, rather sadly, accept that I have made the biggest mistake of my investing career. I have lost 60% of my investment in a very short time frame, which equals to around $20k in amount. Obviously, that is just a fraction of my total portfolio. Nevertheless, it is very sad and a big blunder on my part.
You see, Net Income of Boeing, Delta and Wells Fargo are down (table below), so are their stocks; Net Income of Chipotle and Costco are up and so are their stocks.
| Net Income (Loss) In Billions ($) | |||||
| FY16 | FY17 | FY18 | FY19 | FY20-TTM | |
| Boeing Company | 4.8 | 8.1 | 10.4 | -0.6 | -4.4 |
| Delta Airlines | 4.3 | 3.5 | 3.9 | 4.7 | -10.3 |
| Wells Fargo Bank | 20.3 | 20.5 | 20.6 | 17.9 | 1.6 |
| Chipotle | 0.02 | 0.17 | 0.17 | 0.35 | 0.23 |
| Costco | 2.6 | 3.1 | 3.6 | 4 | 4 |
After all, its not just coincident that the stock price is quite well reflective of what is going on in their respective business.
How did my stupidity played out?
First, my buying process was not quite good. I was greedy and emotional.
I didn’t had any position on Boeing, Delta and Wells Fargo in FY19. When the COVID-19 pandemic hit the United States, I was ignorant to think that the stock sell-out was temporary and I initiated position on those stocks.
Shortly thereafter, the reality knocked me. I came to my sense. Boeing and Delta went straight to blood red on Earnings and I sold them. (Reference above #4) I have held on to Wells Fargo, even though they have cut their dividends.
Be Right and Sit Tight. Or Be Wrong and Sell in Loss. Just like me.
I am a longtime shareholder of Chipotle and Costco. In fact, I have added some more stocks of Costco during the downturn.
Overall, financially, the pandemic has been quite rewarding for me, albeit the inconveniences in the daily life.
Happy Investing; Happy Learning, y’all.
