JC Penney announced on Friday, August 13, 2010, that it made money in the 2nd quarter of 2010 but is concerned about future sales in 2010. The price of the stock went down 5% that day.
When I teach seminars about the stock market, I say the stock market is sometimes described as being about fear and greed and that’s it.
I say the stock market is about psychology and math – and I don’t mean Calculus.
JCPenney’s 52 week high was $37.21 per share. On Friday it reached a 52 week low. Maggie Magilicutties* bought JC Penney for $26 per share in 2004. Over the years she made $40 in dividends which were reinvested in the stock (which means that with the dividend monies JCPenney paid to shareholders, Maggie elected to buy more JCPenney stock).
Maggie’s sister, Meanie Magilicutties, yelled at her on August 13th, saying “You should have sold a long time ago.” If that stock fell 5% in one day it holding onto it is like gambling. “Look”, Maggie replied “I am holding onto the stock”.
Discussion
Some people hold onto stocks for over 10 years. Others buy a stock and sell it on the same day. The vast majority of people who buy and sell on the same day lose money.
Maggie has done her research and learned that JC Penney is a well run company. Some of the analysts recommend to sell and others recommend to buy, still others say ‘Hold’.
Maggie believes that the U.S. will get past these tough times and that JCPenney will be well positioned to do very well, once U.S. consumers begin to buy again. Maggie has friends who sold their shares of JCPenney on Aug. 13th because they saw the stock taking a steep dive that day. Often this is called panic selling.
I often tell my stock market students, if you can not sleep at night wondering about how a stock will perform, it is not worth it and you will most likely lost money.
Vocabulary When a person owns stock, s/he often receives a dividend 4 times per year. This is the company’s way of saying “Thank you for believing in us”. The stockholder can decide whether to receive the dividend as money or as a fraction of the same stock. Over time, these fractions of stock can often add up nicely and become whole. Either way, some investors learn about the dividend before deciding to invest.
NOTE The author of this blog, is a financial educator, not a stock broker and therefore can not make stock recommendations. The purpose of this blog is to educate. Her book, Don’t You Go Broke Learning about Money will be forthcoming.
* Maggie Magilicutties is a made up person for educational purposes.
When I teach seminars about the stock market, I say the stock market is sometimes described as being about fear and greed and that’s it.
I say the stock market is about psychology and math – and I don’t mean Calculus.
JCPenney’s 52 week high was $37.21 per share. On Friday it reached a 52 week low. Maggie Magilicutties* bought JC Penney for $26 per share in 2004. Over the years she made $40 in dividends which were reinvested in the stock (which means that with the dividend monies JCPenney paid to shareholders, Maggie elected to buy more JCPenney stock).
Maggie’s sister, Meanie Magilicutties, yelled at her on August 13th, saying “You should have sold a long time ago.” If that stock fell 5% in one day it holding onto it is like gambling. “Look”, Maggie replied “I am holding onto the stock”.
Discussion
Some people hold onto stocks for over 10 years. Others buy a stock and sell it on the same day. The vast majority of people who buy and sell on the same day lose money.
Maggie has done her research and learned that JC Penney is a well run company. Some of the analysts recommend to sell and others recommend to buy, still others say ‘Hold’.
Maggie believes that the U.S. will get past these tough times and that JCPenney will be well positioned to do very well, once U.S. consumers begin to buy again. Maggie has friends who sold their shares of JCPenney on Aug. 13th because they saw the stock taking a steep dive that day. Often this is called panic selling.
I often tell my stock market students, if you can not sleep at night wondering about how a stock will perform, it is not worth it and you will most likely lost money.
Vocabulary When a person owns stock, s/he often receives a dividend 4 times per year. This is the company’s way of saying “Thank you for believing in us”. The stockholder can decide whether to receive the dividend as money or as a fraction of the same stock. Over time, these fractions of stock can often add up nicely and become whole. Either way, some investors learn about the dividend before deciding to invest.
NOTE The author of this blog, is a financial educator, not a stock broker and therefore can not make stock recommendations. The purpose of this blog is to educate. Her book, Don’t You Go Broke Learning about Money will be forthcoming.
* Maggie Magilicutties is a made up person for educational purposes.
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