I have a relatively small, as related to my net worth, stock account that I frankly use as play money and as an emergency fallback fund. FWIW, I've been quite lucky and this account is up nearly 300% in the last couple/three years.

I primarily invest in biopharma companies and oil and gas concerns and trade in and out frequently, often using options.

The problem, if you want to call it that, is, with the Dow/general market cratering thru last Friday, my account was at a new hi net. I thought about it all weekend and decided I would sell "down to the sleeping point" today.

I woke up late today, after falling sleep watching TV early morning to find my account was UP another 15%, obviously to a new high net total.

At this number, I can sell it all, and pay off mortgage on my new house. The problem is, that would take all my "ready" and I wouldn't have anything to "play" with until I sell some other asset, which is primarily real estate, to raise funds. I am a gambler by nature, and making or losing 10 or 20 grand is not something that really bothers or excites me. Has to be more zeros.

OK, Sell or Sit? I've already sold about 100k's worth today, but am thinking of spending it, buying more stocks. And, because I had some margin debt, those sales have not really improved my net cash position that much.

I honestly don't think I will get any helpful answers, but I am very interested in your feedback which will reflect what you would do in this situation. Thanks for your advice.

Just to add some "color", except for my home mortgage, and credit cards which average less than 10k/month paid in full each month. I have no debt and very little in the way of instantly liquid assets, but I do have substantial borrowing power.
I also have 2 daughters that are currently at UT Austin, which cost about $30K/year each to keep in school, food, clothes, and shelter. Luckily one is graduating this spring with honors grades in biomedical engineering and is very likely to find a good job. The other is a freshman, so I'm looking at 4 more years of parasitical payments for her, at least. My monthly income is EXTREMELY dependent on oil and nat gas prices. My monthly mortgage payment is 6K and I usually pay at least 10K. I am extremely uncomfortable owing money.

I think I would be in the "sit" category.

I can't find anything to invest in that makes more sense than where I am right now. I'm a buy-n-hold guy. I haven't added a new stock to my portfolio in over six years. I have sold a little. I won't sell stock to pay mortgages quite yet. I have one mortgage at 2.625%. No reason to rush to pay that off. The other two would require me to sell stock to pay them off. My stocks pay an average dividend of 3.5%, but when you factor in price appreciation it jumps up to 6.3%. I don't care to mess with that.

If I was sitting on a mortgage above 7%, I would have refinanced by now, or a number like that would make me sell something to pay it off.

I'll submit my tax info to my accountant next week. Once I see who is gonna owe who, I'll know whether I have money to invest. Right now I think the political situation is too unstable for me to put much more into the market. I'm deep enough into real estate.

My goal is to preserve what I have. Short of winning the Power Ball, nothing is going to change my lifestyle at my age, unless I screw-up "gambling" on pie in the sky.

At the rate we're spending money since I retired, I'll run out of cash in about the year 2463, so making more money doesn't mean a heck of a lot to me.

I think I'll sit on the bench and watch other guys pounding their heads against a wall. You can come sit by me and we'll drink beer and watch people race up and down the highway trying to get their sacks full.

To bring those who want to know, the few, the proud, I basically punted and kept doing what I usually do, or put another way, I'm all in. I sold a bunch of stock that had appreciated greatly while switching into a couple of new bio tech stocks. BTW the stock I sold was one I mentioned in here a while back, VCEL, I sold most of it above $11/share. My initial purchases in volume were less than $2.50. Still have a few thousand left, but am trying to kick them out over $12. Still a great stock, BTW, but nothing grows to the sky. If it retreats significantly, I will re-buy. Meanwhile, I'm betting on a couple of more, while hoping my other prime holding CNAT continues to climb. NONE OF THESE ARE RECOMMENDATIONS AND ONE SHOULD CAREFULLY CONSIDER YOUR FINANCIAL POSITION AND RISK REACTIONS WHEN BUYING ANY, BUT ESPECIALLY, BIO-MED STOCKS. THE SLIGHTEST BAD NEWS CAN, AND OFTEN WILL CUT THEM IN HALF OR MORE. YOU HAVE BEEN WARNED.

quote:

Originally posted by Gatogordo:
To bring those who want to know, the few, the proud, I basically punted and kept doing what I usually do, or put another way, I'm all in. I sold a bunch of stock that had appreciated greatly while switching into a couple of new bio tech stocks. BTW the stock I sold was one I mentioned in here a while back, VCEL, I sold most of it above $11/share. My initial purchases in volume were less than $2.50. Still have a few thousand left, but am trying to kick them out over $12. Still a great stock, BTW, but nothing grows to the sky. If it retreats significantly, I will re-buy. Meanwhile, I'm betting on a couple of more, while hoping my other prime holding CNAT continues to climb. NONE OF THESE ARE RECOMMENDATIONS AND ONE SHOULD CAREFULLY CONSIDER YOUR FINANCIAL POSITION AND RISK REACTIONS WHEN BUYING ANY, BUT ESPECIALLY, BIO-MED STOCKS. THE SLIGHTEST BAD NEWS CAN, AND OFTEN WILL CUT THEM IN HALF OR MORE. YOU HAVE BEEN WARNED.

I remember your vcel post very well. It included your share count and your purchase price.

I don’t do much biotech but I know some smart guys. I mentioned vcel and they said pass and they did not own it. Shows you how much they and I know.

Well done.

Mike

My mother used to ask if I wasn't worried about the stock market crashing - I'd tell her it will crash two or three times between now and the time I'll need the money, and recover each time. I suspect we may take a bath one of these days.

Having said that, if you take the money out, where will you stash it? If interest goes up, longer-term bonds won't sell for what you paid. I have doubts about real estate over a medium term. Metals are fine if people have the cash to buy them from you when the time comes to convert.

I'm going to leave things alone and keep working.

My mother believed in CDs. That was after my father "invested" in uranium mines and chinchillas.

quote:

Originally posted by TomP:
My mother used to ask if I wasn't worried about the stock market crashing - I'd tell her it will crash two or three times between now and the time I'll need the money, and recover each time. I suspect we may take a bath one of these days.

Having said that, if you take the money out, where will you stash it? If interest goes up, longer-term bonds won't sell for what you paid. I have doubts about real estate over a medium term. Metals are fine if people have the cash to buy them from you when the time comes to convert.

I'm going to leave things alone and keep working.

Working?

AFA money stash goes, I don't give a fuck about interest rates, what I want is instant access to my cash when a good deal, whether in stocks, real estate, art, whatever, comes along. Which is almost everyday, but people don't have the ready cash to take advantage of it. So, to answer your question, I put it in my checking account, which because it has both my and my wife's name on it is insured for $200K by Uncle Sammy. People who worry about interest rates aren't playing on the same field I am. One of my prime money makers, which essentially for my simple methods, requires a bull market in that particular stock, is to buy and write calls on a stock. I usually won't do so unless I am receiving about 1% a WEEK returns. But it can bite you in the ass. For instance, one of my favorite oil stocks is Apache, APA, and you can easily exceed my 1% goals AS LONG AS STOCK HOLDS or GAINS. It certainly doesn't do so all the time and, my gut tells me when to play or not. Sometimes, my gut is right and sometimes I get diarrhea and shit money. That's why the game is so much fun.

BTW, after being in and under the stock market for nearly 50 years, I'm convinced it it an elaborate Ponzi scheme, which puts Las Vegas to shame. The "true believers" like the game and say how great it is, more grist for the money guys mill.

Purely for the crowd of interest guys, I am going to mention a stock I like that current pays about a 6% dividend. OMI. I don't own any of it because it is too tame for my game but every now and then I sell a put on it which is found money at these levels.

In the interest of semi-full disclosure, my largest monetary holding at this point is Conatus (CNAT) which I REALLY like and am convinced will be in the $20 range or more if it is bought out before long. It is currently holding just below $7, which is still a buying level IMO. Not that I follow stock market pimps, but Oppenheimer just came out with a "buy" rec with a price target of $16. I certainly hope, for once, they are right.

My initial positions in CNAT were in the $4/5 range or a bit below, but I sell into rises, and buy back on retreats, so my cost basis is somewhat higher at this time. They have a wonder drug IN TESTING which seems to do very well but if anything negative comes out, the stock could easily and very quickly fall by 75%. YOU HAVE BEEN WARNED.

I currently own 13 stocks, 12 of which are bio teck/pharma and APA, so my risk is spread around to some extent but, of course, I am seriously exposed to negative medical news which seems to be a goal of the Trump administration but hell, it's all part of the game. To paraphrase Barnum "Greatest Game on Earth", but, like any game, it is a helluva lot more fun when you're winning for which I give much credit to the Trump ad.

I still support the Trump admin. however + this is very important;due to his new tarriff bill under the heading of homeland security our / my steel prices have increased 40% inside of 2 weeks.The long story is that jobs have shut down. I thinkk that he believed that increasing tarriffs would help the US steel industry;wrong!Our nation corp owners) sold out long ago.Basically,the middle class working man gets it in the shorts.

Your story kind of reads like Edwin Lefevre's book Reminiscences of a Stock Operator and Nicholas Darvis' book How I Made $2,000,000 in the Stock Market.

Congratulations on your wonderful investing success. Your life has been blessed in many ways. It sounds like you have a wonderful wife, wonderful daughters, a wonderful home, and the money to live the way you want.

I think you hit on a good plan already.

You might continue to sell puts on the stocks you want to own at cheaper prices, and have cash ready if and when those stock get put to you at the strike price you feel comfortable buying at.
And then, of course, start selling the covered calls a couple of strikes out to keep some cash flow while you wait for those stocks to advance to a strike where you feel you need to cash in.

I know three kinds of investors from the last recession. Some who had a very good portfolio and waited until things got really bad and then sold out. They lost huge money. And some, who also had good stocks and didn't get psyched out when things got really low. That's when they started buying more good stocks when they had extra cash. They don't need to work ever again. And of course those who had poor stocks during the last recession. They have made a little money.

Continued good success on whatever you choose to do. But I think there is also one universal truth in investing. The older one gets the less risk one should take.

quote:

Originally posted by lindy2:
Your story kind of reads like Edwin Lefevre's book Reminiscences of a Stock Operator and Nicholas Darvis' book How I Made $2,000,000 in the Stock Market.

Congratulations on your wonderful investing success. Your life has been blessed in many ways. It sounds like you have a wonderful wife, wonderful daughters, a wonderful home, and the money to live the way you want.

I think you hit on a good plan already.

You might continue to sell puts on the stocks you want to own at cheaper prices, and have cash ready if and when those stock get put to you at the strike price you feel comfortable buying at.
And then, of course, start selling the covered calls a couple of strikes out to keep some cash flow while you wait for those stocks to advance to a strike where you feel you need to cash in.

I know three kinds of investors from the last recession. Some who had a very good portfolio and waited until things got really bad and then sold out. They lost huge money. And some, who also had good stocks and didn't get psyched out when things got really low. That's when they started buying more good stocks when they had extra cash. They don't need to work ever again. And of course those who had poor stocks during the last recession. They have made a little money.

Continued good success on whatever you choose to do. But I think there is also one universal truth in investing. The older one gets the less risk one should take.

Thanks for the kind words and good wishes. I'm not used to them on this site.

My only quibble is with your last "The older one gets the less risk one should take". Certainly true for the vast majority of Americans who are usually grossly underfunded for their expected life span these days. The life span post retirement has gone up significantly over the years because of better medical care and advances in drug therapy. However, there are some people who are grossly overfunded for their expected life span. So, what possible reasons should they have for taking less risks? There is no real use in having a limousine taking one to the grave. Many of the most successful investors are "of an age". Should Warren Buffet stop taking risks? I could name a half a dozen really rich players in the game who are "too old" to take risks, but do so every day, usually with some degree of success.
The point of this quibble is not that you were wrong, but rather that there is not a "one size fits all" in investing.

I know a few very wealthy people who say the same thing. They have made an estate plan that takes care of their loved ones very well, and plan to use the balance of their wealth to have fun with - the thinking being that they hope they can time it so they spend their last penny a few minutes before they die.

Nothing wrong with that, and it sounds like you are in a category where you have sufficient funds to take a bit more risk.

I think Warren keeps doing what he does because to him what he does is fun. He loves what he does and he doesn't want to do anything else.

If you feel the same way and you have the capital you should do whatever you want to do.
After all, its your money, you earned it, and except for a few restrictions you have the right to invest and spend it anyway you want depending on your tolerance for risk, which only you, being you, can understand.

Continued success.

My thoughts are probably different from most of the others. I would suggest selling enough to pay off the mortgage. Then every month, take the amount of your mortgage payment, which you don't have anymore, and invest that wherever you feel comfortable.

If things really collapse, do you really want the bank owning your home? Another way to consider it is, if your home were paid off, would you take out a mortgage on the house, to buy stocks? Same situation.

Although mortgage interest rates are at an extreme low, and stock growth is great right now, shit happens. I'd rather have the homestead free of a mortgage.

quote:

Originally posted by Nashcat:
My thoughts are probably different from most of the others. I would suggest selling enough to pay off the mortgage. Then every month, take the amount of your mortgage payment, which you don't have anymore, and invest that wherever you feel comfortable.

If things really collapse, do you really want the bank owning your home? Another way to consider it is, if your home were paid off, would you take out a mortgage on the house, to buy stocks? Same situation.

Although mortgage interest rates are at an extreme low, and stock growth is great right now, shit happens. I'd rather have the homestead free of a mortgage.

Well, I would tend to agree with you, since owing money really hurts my psyche. However, if I didn't make it clear, paying off the mortgage would have taken ALL of the monetary value I have in stocks right now. Selling them would, first, incur some fairly serious tax liabilities, and second, lose the favorable cost basis I have in many of my stocks. Also, since that original post, my account is up over 6%, which always helps with a "stay the course" decision.

The bank won't own my home, but, if it became impossible for me to pay the mortgage, I still own the one we moved out of to move into this one. It ain't a dump, but it would do. Hell, if it wasn't for little things like wives, I can easily live out of a tent but the quality of cooking would decline significantly. Finally, as mentioned above, the homestead is not my only asset and everything else I have is debt free, which is mostly in real estate, but also some other significant values in collectibles, which values tend to be recession proof because they are on a world wide basis.