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Precious Metals - Kmart - Kodak - Sears -
Turner Broadcasting - Walmart

Thursday, August 03, 2006

Selling It

Up till now I have been primarily discussing buying stock. But few buy without considering the eventual goal to sell the stock. After all, "buy low, sell high," is the investor's slogan, is it not?

I have had mixed luck in keeping to that strategy over the years. As I stated in a previous post, I pretty much dumped Sears and Kmart, feeling lucky to have sold them for about what I paid for them. Though I tried to wait till their value reached a little more than their original costs, thus at least returning my investment costs, (broker commissions,) I lost any gain I would have realized by having the funds in some bank or credit union savings account instead. Live and learn.

However, in another post, I stated that I had great luck with Turner Broadcasting System. My first purchase of 25 shares of TBS cost about two hundred fifty bucks with commission. A later purchase of an additional 50 shares set me back $1500 after the price climbed significantly. Therefore, my entire interest in TBS was about $1750. Turner split a few times, but not before joining media conglomerate Time Warner, and at one point, my interest in the company was valued at over $13,000.

It was right around that time when Kathy and I were looking to buy a house. I sold about $2,000 worth of Time Warner, (remember, I had only ever paid $1750 for my stock certificates,) along with shares of other companies I held and used the proceeds towards our down payment.

Bottom drops out

Soon after we purchased our house, Time Warner was bought out by another media giant, AOL. Market watchers wet their lips in anticipation of what could happen after this gigantic team got together.

What happened was ... everything fell apart. It is beyond the scope of this blog to discuss what went wrong, but the result was that AOL Time Warner went from about $46 a share to about nine dollars and change in a very short time. I lost thousands in value for my remaining shares. Had I sold nearly all of my holdings when we went to buy our house, I would have gotten out just in time, and would have had quite a gain to boast.

As it is, I had little choice but to hold and pray. AOL had climbed to about twenty bucks a share, but never gained anything close to half its value before the merger. It's going up and down a bit now, but when it comes to buying and selling stock, you just never know.

In a future post, I'll talk about other experiences I had selling stock.

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