Need Advice on A Position (Major Loser) Dollar-Cost Average?

[tommcginnis]

I wouldn't offer an opinion without knowing the rig count and commodity price (now, and when you bought). NG equities have such ties to both of those.

I would also take a gander at domestic U.S. consumption, AND at LNG exports #s -- they are NOT going to be heading down: the question is, is the *extraction* cost > or = or < the market.

(And so, we just circled back to rig counts....)

I don't know what took it to $90 (or, what took it to $70) but long term, I'd remain bullish.

 

[Steve Alexander]

Sell.

 

[ironchef]

12 said sell. So it is a buy.

 

[mbondy]

If you thought the company was worth buying at $90, and your thoughts are still the same, then it should be an even better bargain at $75. In light of that, it would be stupid not to average in.

 

[kj5159]

To expand on Robert Morse's original post a little bit, if you own a stock that you intended on buying for an investment (not a trade) and it drops substantially then either a) something has changed about the company and you should get out or b) you were wrong about something (could be entry valuation or something about the business itself) and you should get out or c) you should buy more because fundamentals are either the same or better than when you bought initially and the price has since gone down making the investment even more attractive.

 

[wildchild]

Took a long position last November in a company I believed in (and still do). It is an oil and gas company named Cimarex Energy (XEC) and I have worked with them off and on since 2010. I bought 220 shares @ $90.58 for a total investment of $19,928 and it has basically steady dropped since my purchase to a current price of ~$70. I bought in because I saw them with my own eyes making good decisions...they have smart management and have always held a great reputation in the Oklahoma Oil Field.

I have started this thread for your "Elite" opinions on my position. I plan on keeping it for the long run but am open to suggestions. I am considering buying more shares while the price is down to average out but undecided.

thank you in advance for the advice, I know these types of questions might be annoying to some of you seasoned traders and I appreciate your time. I am serious about becoming a better trader and researching every day educating myself to get there.

How much longer do you want to hold it? If you are planning to hold it at least medium to long term, it doesnt look like a bad stock to me. Of course that means this would be more of an investment than a trade.

Buy.

 

[AAAintheBeltway]

This stock appears closely correlated to oil prices, which is hardly surprising. The OP appears to have bought right before oil took a 40% drop, and XEC had a similar drop. Ideally, you buy any sort of commodity company when prices are low, not when they are making yearly highs. A lot of people on here are momentum traders, hence the advice to dump it. But trading a commodity company, or a bond substitute like a REIT, requires a different approach. They are not going to go to the moon, but over time, they do show regression to the mean.

I did a couple of minutes fundamental research on the company and it seems to be producing decent numbers. So hopefully we can assume the company's price is reflecting oil market fundamentals, not any kind of company-specific problem.

Going forward then, you need to have an opinion on oil prices. They have rallied 20% or so off their year end lows and XEC has followed suit. XEC also did a major acquisition recently which might be impacting trade in it.

No one can give you responsible advice on what to do with a stock without understanding your entire financial situation. Just looking at the company however, I would be more inclined to buy it here than sell it.

 

[zghorner]

great stuff everyone I really appreciate the education. I have decided to continue holding for the long term as originally planned. Having $20k wrapped up isn't a big deal and even if it were to all disappear it wouldn't change the way I live, I am not wealthy my any means but am debt free with little expenses. I bought high and that was a mistake...I know the importance of entry point and f*cked up. I have watched it tank and my emotions are flaring up and I know that is a mistake. I purchased a healthy company and (like others) don't see any reason for it to continue taking a dump (other than the price of oil) so I choose not to sell low. Buy high sell low is the perfect recipe for poverty...So instead my plan on this one is to buy high sell high haha.


Extra special thank you to this little quote below, I find myself doing this on a lot of things...trying to see a value buy opportunity by price alone.

With this in mind - how do you personally decide what factors you will base your decision on? Or what your target price is? I mean - how do you decide that it's not likely to go to $50? If previous price is the only factor in your decision making, you are guaranteed to be always buying things that are on their way down, right?

 

[murray t turtle]

great stuff everyone I really appreciate the education. I have decided to continue holding for the long term as originally planned. Having $20k wrapped up isn't a big deal and even if it were to all disappear it wouldn't change the way I live, I am not wealthy my any means but am debt free with little expenses. I bought high and that was a mistake...I know the importance of entry point and f*cked up. I have watched it tank and my emotions are flaring up and I know that is a mistake. I purchased a healthy company and (like others) don't see any reason for it to continue taking a dump (other than the price of oil) so I choose not to sell low. Buy high sell low is the perfect recipe for poverty...So instead my plan on this one is to buy high sell high haha.


Extra special thank you to this little quote below, I find myself doing this on a lot of things...trying to see a value buy opportunity by price alone.

%%
Well it pays a dividend; and actually that can be a good plan-buy HI, sell higher. IBD founder made his fortune that way+ with a NYSE seat.............................................................
HOWEVER part of his 500 page plus plan is cutting losses @ 7-8%; 200dma is what he called ´late sell signal´ LOL....... Also for a good mutual fund/ETF hold them. Congrats on debt free ....
....................................................................................................................

 

[HolyGrailSeeker]

From a technical standpoint. Theres an old adage, don't ever average your losers.

I do not use fundamentals. But from an investor standpoint buying shares cheap is contraian method and will work in the very long run.

Only downside is how long? Could be several years or decades before you get in the green. Also, you may think the fundamentals of a certain company are great but these are subjective factors, insiders may have a better knowledge and are selling off their shares.