I follow and learn a great deal about Empire Avenue from http://www.empireavenue.com/CHRISRECORD – if you have not invested in Chris yet, please do so, he is a great team player.
I recently received a share holder email from Chris where he explained a conversation he had with @dups http://www.empireavenue.com/DUPS regarding the selling of Empire Avenue shares. I learned a great deal from this conversation so I asked Chris if I could repeat it here and of course he granted me his permission to do so… Thanks Chris.
Quoting Chris Record
Today I want to have a Discussion with you about Selling Strategies. If you are seasoned here at EAv, PLEASE comment to clarify any misunderstandings or bad math I may have in this email! With that being said, here we go…
Most players are in the dark about how Empire Avenue calculates your share price. It’s actually quite easy to understand. So I am going to clarify some things that I learned about today.
First, let me start with the biggest breakthrough I had today!
If you have stocks in the RED in your portfolio, they DO NOT affect your own share price at all!
I always thought that the best strategy to get out of the red yourself was to dump all the poor performing stocks in the red that you own, and use those eaves to buy stocks in the green.
Unfortunately I was wrong about this one according to @dups
Sure, it does make sense to sell stocks in the red BUT you need to realise that you might be earning more from their dividends than you lost in their overall value decline for the day! PLUS when you sell it costs you 5% commission!
For example, if you own 200 shares in a stock that drops 1 point for the day. You have lost a couple hundred eaves in value. But if you look at the last dividend of that stock, it might have paid 180 eaves. So in reality you might have only lost 20 eaves in value (which is very small when you think about it).
And the next day that stock might go back up in value, not only paying you more dividends but also appreciation.
Now, let’s say that same stock is at 50e/share. If you SOLD all 200 shares of that stock then you will have lost an additional 500 eaves (5% commission) on top of the 20 eaves you lost for the day.
You need to ask yourself if it’s really worth it? Which is a better loss for the day? 20 eaves or 520 eaves? And in many cases you might actually be earning MORE from their dividends than you are losing from their share price dip!
So WHEN should you sell?
Basically the ONLY reason you would want to sell is to free up more eaves to invest in others with.
If you already get plenty of eaves daily from dividends, then technically you may not need to sell. But if you want/need more eaves to invest in more people, then you need to find stocks to sell to help boost your bank account.
But when you do look for stocks to sell, be sure to use your best judgement as to whether or not the stock has a chance to rebound from it’s dip or not. If the person is very active and engaged, perhaps even reach out to them, or look at their weekly activities.
The WORST thing you could do is sell a great stock because they took the weekend off or went on Holiday. YOU would lose more than they would, and you would be part of a group of people sending that great stock in a downward spiral. Would you want that to happen to you? Plus, they might rebound significantly on Monday, and would have a better chance to do so if you didn’t sell them.
I must admit I use to think these stocks were hurting my value and I would sell them, sometimes even on the weekend, not realizing how much eaves I was actually losing by doing so.
But of course, selling is part of the game strategy. So you should develop a system for how you will effectively sell. For example, today I sold numerous stocks that were in the red and tanking, because I bought them purely on speculation. They were new accounts with very low divs. I gambled on them and it didn’t pay off so I sold and cut my losses.
So let’s look at a few types of stocks you might want to sell daily:
1) Speculative stocks that don’t rise quick, or have peaked and are sliding with low divs.
2) Accounts that still have the baby face and are declining (if they are not engaged enough to add a profile picture, why bother?)
3) Sliding stocks with extremely low divs, where you are clearly losing eaves everyday by holding them.
4) Stocks that are tanking (-2, -3, -4, -5 daily, etc). You need to make a judgement call quick on these whether you think they will rebound or keep tanking. If you are going to get out, get out early!
PLEASE COMMENT below if you can add to the leaqrning experience for us all and to continue the discussion.
And if you have a little time please follow Chris on Empire Avenue http://www.empireavenue.com/CHRISRECORD and also click this link to Like and read his Facebook page.