November 20, 2013 Comments

On Wednesday the S&P 500 was down 0.4% and Toronto was down 0.1%. Markets were initially positive on positive economic news regarding consumer spending but turned negative when minutes of the FED meeting disclosed discussions that tapering of the bond buying could begin soon. Among the stocks I keep an eye ion I notice Couche-Tard was up another 2.0% to $73.50. It appears that I sold that one far too early. Then again, it’s hard to say what I put the money into and given my gains these past two years I have no complaints about having sold a lot of stocks at well below today’s prices.

It seems to me that gains on higher price stocks are sort of smaller than they appear to be. A stock rising from $80 to $90 seems great and is great. But at 12.5% it is nowhere near as good as the 50% gain when a stock rises from $10 to $15, though at first glance it may look like a larger gain. We may sometimes feel regret about selling a stock at $80 that soon went to $90, when the fact is we may have put the money received on the sale into a $20 stock that rose to $22.50 or more and therefore it was not a bad thing that we sold but it may feel like it. We tend to “compartmentalize” our investments into individual stocks whereby we can regret the gain we missed out on while forgetting the gain we obtained by reinvesting the proceeds. I know that happens to me, where a sale of a stock feels regrettable but really was not regrettable.. And of course sometimes it truly was regrettable that I sold.

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