Saturday, January 25, 2020

Verizon (VZ)

   This post is a continuation of the $50 a month stock challenge I started October 14, 2019.  Click on, "No Commission Stock Trades", on the right side of the page to read from the start.

I start the month with $214.98 to invest and that will be my self-imposed trading limit for the whole month. 

     $214.98 x 2% = $4.30 profit needed.

     Back on December 23, 2019 , I purchased 1 share of VZ in hopes of the stock prices rising before the 01/09 dividend ex-date or just holding to collect the $0.61 dividend.

     The price hasn't reacted the way I wished but I did "capture" the dividend and will be paid on 02/03.  By capture, I mean that I bought before and hold until ex-date. If I sell on or after the ex-date, the company "owes" me the dividend to be paid on 02/03, even if I no longer own the stock.

     If you have been following along, you know my goal is to average a monthly profit of 2% a month based on my starting monthly balance. By updating my balance each month I get a true percentage for the month and at the same time I compounding the profits.

     As you can see from the above equation, I need $4.30 profit this month to achieve my 2% profit. How does this have any thing to do with VZ?

     VZ represents over 28% (I paid $61.60 for it) of my $214.98 starting monthly balance. While I think VZ stock will recover, I think (by my proven track record) that the money from selling VZ at a lose is  far better than holding it until it recovers.

     I am not about trying to prove I am right al the time (I certainly am not), I am about making an overall profit from my trades.

     If I sell VZ for a $1.00 lose (just a reasonable example) that would mean a lose of 1.62% lose on VZ. That same $1.00 lose translates to only 0.46% (less the 1/2 percent) of my monthly balance.

     My monthly profits will still exceed my 2% profit goal EVEN after deducting the $1.00 lose. The advantage to selling at a lose (while still exceeding my 2% goal) is that it will  free up money to invest and add to my profits.

     Remember how I beat the market , every trade is made on its own merit at the time of the trade. You must have the disciple to do what is right for your account and not let your ego get in the way.

     I will continue this discussion tomorrow.

Disclaimer, I am not a professional.

your comments are welcomed and appreciated.


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