Markets move in cycles and stocks go up and down are something everyone hears, often in one ear and out the other. We all want the stocks we buy to go up and when they do, we become a Wall Street champ. However, many people do not sell and ride the company they fell in love with all the way down and soon you are the Wall Street chump for not selling. There are multiple reasons why the selling did not occur, for the 2 lessons of cycles and prices go up and down are not hard to understand, it is the execution of those simple words.
In an article by Sinead Carew entitled Pandemic darlings’ stock saga ends in tears is about not selling if you own Peloton and Zoom. Both companies are examples of the catch a wave and on Wall Street if you catch a wave, it is a big wave. Peloton and Zoom were in the perfect place or the right time at the right place. COVID shut down gatherings, but people still needed to exercise and communicate with each other. The stocks soared as they were in a position to expand quickly. Peloton went to $171.09 in early 2021, but times changed, and you can buy Peloton for less than $10. Zoom peaked at $588.84 in October of 2020 now you can buy at around $75. Many people made and lost money on these stocks, hopefully some sold along the way.
Linking to dividend producing stocks, the reasons you want to own the stocks is over the long term the total return of capital appreciation and dividends means your wealth goes up. In the short term all stocks go up and down and the markets go in cycles. Cycles mean during the phases of the economy some stocks do better than others depending on the overall economic outlook. If you own a stock which appreciates rapidly, take some profits, otherwise you will have none. If you own dividend stocks as long as the company is profitable and pays a dividend you do not have to do anything but hold.
There are more questions than answers, till the next time – to raising questions.