This post speaks in general terms and does not seek to offer financial advice. For questions about your unique situation, please consult with the appropriate professional. Invest at your own risk, always.
On Friday, January 20th I sold all shares I was holding of Apple stock.
I took advantage of the Santa Clause effect and the January effect.
I bought in just a few days before Christmas.
I got in somewhere around $391 per share and sold it last Thursday, then bought again on last Friday.
This Friday (yesterday the 20th of January) I sold the stock and will stay out if until after earnings.
The price I sold at was somewhere around $424 per share.
There are a few factors that I considered.
1. The January effect is known to end around mid January.
2. There were a number of tech stocks that were delivering less-than-expected earnings reports this week.
3. Apple’s earning report is on Tuesday, January 24th after the bell.
4. Generally speaking, it is not a good idea to hold through an earnings report – however, sometimes it really pays to do so.
5. On Thursday, the market had a positive day overall but Apple lost a little and it did so on heavier than ‘normal’ volume.
6. Appl had hit a high and appeared to be unable to push beyond it.
7. It started to Fall on Friday. After I got out it feel another 4 dollars beyond the 3 per share it had already fallen when I exited.
These are my reasons for getting out of Appl. Of course, I did not know it would fall further on Friday, but with the exception of that, the other points are reasonable.
Now, I am by no means an expert investor. This trade worked out for me, but not all trades do.
I hope that I have become wiser by making a number of trades over the last several years.
Many investors would not agree with what I have done. Some do not agree with jumping in and out of the market at all.
I trade on my retirement IRAs so I don’t have to worry about recording all the gains and losses for tax purposes. On a taxable account, you do need to worry about this.
Again, you should consult with your investment advisor before making any trades and you should understand all risks involved.
Eventually, I would like to reach the point where I can just make money by writing covered calls. This is what I understand has let to the huge success of Berkshire Hathaway. As I understand it, it is not the long term buy and hold strategy but rather the writing of covered calls (which basically amounts to writing insurance for other investors) is what has led to the huge success of that company. Disclaimer: I could be very wrong about that, but that is what I believe based on ‘hearing’ a few things here and there. So you cannot trust that I am correct on on this matter. As always do your own research!
Another disclaimer: I will probably buy Appl stock again in the near future.
This is what I have to say about my latest trade. If you have comments, thoughts, ideas or criticisms, please leave them below: