![]() If you think every rumor is valid, it increases your chances of making a poor decision. Try not to get distracted by these rumors and instead focus on the known information that’s available. Why did you buy the stock in the first place and how does the new information impact that reasoning? You might decide that a disappointing earnings report is due to a short-term issue that was outside of management’s control, or you might think it’s a sign of new competition challenging the company’s market position.ĭuring major declines, there can sometimes be rumors that can add further discomfort. A stock represents an ownership interest in an actual business and isn’t just a price flashing red or green on a screen.Īs you analyze what’s causing the sell-off, think about how the event does or doesn’t change your view of the business. ![]() Try to remember the basics when you’re in the midst of a chaotic decline. When a stock is declining and it’s being talked about in the financial media, it’s easy to get distracted. ![]() Remember your shares represent part ownership in the business Understanding these feelings can help you control them better and make a more rational decision. It doesn’t know or care where you bought it or what you do with it in the future. Anything that helps slow down your emotional response can help you make a better decision.Įven though you have all these feelings about the stock – you might be mad at the CEO for whatever caused the stock to decline or want to scream at whoever told you to buy the stock in the first place – the stock has no feelings about you. It might help to take a deep breath or slowly count to ten. After all, you’re losing money, which can create feelings of fear and loss.īut we don’t make our best decisions when we’re experiencing an emotional event, so it’s best to try to manage your emotional response to a large stock decline. Seeing a stock decline by a significant amount is likely to cause an emotional reaction in most investors. What to do when a stock you own crashes 1. So what should investors do when stock gains evaporate or profits become losses? Here’s how to decide what to do when a stock you own plummets. ![]() Shares of other banks including First Republic Bank (FRC), Comerica (CMA) and Charles Schwab (SCHW) all saw their stocks fall by at least 30 percent in a matter of days. More recently, shares of many regional banks have dropped sharply following the collapse of Silicon Valley Bank and Signature Bank, which were taken over by the federal government in March 2023. The S&P 500 entered a bear market and shares of several previous market favorites have tumbled, sometimes plummeting more than 20 percent in a single day. Get a free trial of John’s live options trading room here.Stock investors have had a rough year since the Federal Reserve began hiking interest rates in March 2022. But that previous resistance, which is now potential support, looks strong enough to keep it from moving lower again for at least two weeks.Īs of this writing, John Kmiecik did not hold a position in any of the aforementioned securities. Previously, the stock could not find a way to successfully close over that plateau two days in a row until Friday.Ī weak market and some profit taking could hold LNKD stock back this week. LinkedIn said the proceeds will be used to strengthen its balance sheet, among other things.Ĭlick to Enlarge If you look at the chart, LinkedIn stock blew though a resistance area around $240 last Thursday. Just this past week, LNKD announced it would issue $1 billion worth of new stock, and eventually ended up raising $1.2 billion. This could be critical for LinkedIn’s continued success. However, judging by the last unemployment report, there still are plenty of people looking for jobs. The rationale: LinkedIn announced earnings at the beginning of August, and investors were pleased, sending the stock soaring after the announcement. The maximum loss is $4.25 ($5 – $0.75) if LNKD is trading below $235 at expiration. Breakeven is $239.25 at expiration based on a credit of 74 cents. The strategy: The maximum potential profit for this trade is 75 cents if LNKD is trading above $240 at September expiration. The trade: Sell the Sep 21 235/240 Put Credit Spread (selling the Sep 21 240 put and buying the Sep 21 235 put) for 75 cents or better. LinkedIn (LNKD - $252.22): Put Credit Spread Here is a trade idea on a company that could give many of those people a helping hand: In August, unemployment dropped to its lowest level in five years - but one of the main reasons could be that many people have stopped looking for work. There is much debate about the latest unemployment data.
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