# $500 Feeler with 10% ROI - SELL or HOLD?



## Ag Driver (Dec 13, 2012)

Ok. So, I am a rookie trader and learning as much as I can. I started off with $500 feelers in a few different stocks with a 10% goal in mind (including dividends). POT is my only remaining "feeler" with only 12 shares, all others have been bumped up to 50/100 shares. I have reached my 10% goal with POT.TO as I bought in at 39.00 ($40.597 averaged with commission). Including dividends and commissions I should see around a 10% ROI if I were to sell today. 

Things to note:
-I do not need the $500 for anything, it will likely sit as cash
-As it stands right now, my strategy is to invest in individual dividend paying stocks for long term holdings.
-I now like to hold shares in 50/100 share increments so it will be easier to work with when it comes to options down the line. 
-POT just increase their dividend.
-I understand that the initial buy price at $39 is close to the average when comparing to the 52 week high and low, which is another reason why I bought in at that price point.
-I do not DRIP, nor do I plan on it in the future.

Do I hold, keep collecting my dividends, and dollar cost average down the line and bring it up to 50 or 100 shares if/when it drops to 39 or lower?
or
Do sell for my 10%+ goal, and re-invest if/when it drops below 39 for a target re-entry of 50-100 shares.

Thanks for the advice! This would be my first time selling, and it would be at a 10% ROI. :chuncky:


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## andrewf (Mar 1, 2010)

I won't add anything besides saying that this is a difficult question to answer without talking about underlying assumptions.


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## Eclectic12 (Oct 20, 2010)

Ag Driver said:


> Do I hold, keep collecting my dividends, and dollar cost average down the line and bring it up to 50 or 100 shares if/when it drops to 39 or lower?


Where are you keeping the stock, in a CAD or USD account with which brokerage?

Potash pays the dividend to brokerages in USD. Where POT is held in CAD account, most brokerages will automatically convert the USD dividend into CAD cash and take a currency conversion fee, reducing the cash paid.

You'll probably want to confirm whether this applies and factor it into your decision. Or take steps to avoid the USD to CAD conversion.


Cheers


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## Toronto.gal (Jan 8, 2010)

Ag Driver said:


> 1. As it stands right now, my strategy is to invest in individual dividend paying stocks for long term holdings.
> 2. POT just increase their dividend....I do not DRIP
> 3. Do I hold, keep collecting my dividends, and dollar cost average down the line and bring it up to 50 or 100 shares if/when it drops to 39 or lower?
> 4. This would be my first time selling, and it would be at a 10% ROI. :chuncky:


*1.* Best strategy, and yes, make 100 shares your goal for the reasons you mentioned!

*2. *True, the div. has increased, however, to be able to DRIP, you would need at least 130 shares at current price, which is nearing $45, and more if the price continues to rise [*USD*$.35 cents x 130 sh = $45.50]. So this is not a concern as you don't plan to DRIP in any case.

*3.* This stock [if you have studied the price chart] is extremely volatile, but for just 12 shares, I would hold given that 2012 was a very bad year for the company due to lower commodity prices/deferred purchases and others factors that you should know about if it's one of your stocks, however, 2013 is supposed to see an increase in shipments, so I'm hoping to see POT prices in the $50's+.

*4.* In that case, I'm not sure, because if the stock drops, would you be disappointed? You have 20 more minutes to think about it.


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## thompsg4416 (Aug 18, 2010)

I like your style. I wish I was clever enough to dangle my toes with a few 500 dollar feelers when I first started instead of jumping in head first. 

I like POT I think its a good investment but I don't like that you have only 12 shares. As you said you want to start dealing with 50-100 shares - I think that is a great idea. I don't know what account you have this in or with what brokerage but with only 12 shares commission can definitely cut into your ROI. 

My advice(Its free and sometimes you get what you pay for):

1)If you have the money wait for the right time and add to your position. As TGAL says this is a pretty volatile stock with some pretty big price swings. I've traded it a few times. POT has been under 39 twice in the last 3 months and is above its 20/50/100/200 moving averages. 

2)Sell and either add to another position or keep your cash position.


Good luck!!


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## Oldroe (Sep 18, 2009)

You are doing amazing so far.

The very hardest lesson to learn is selling.

You looked at your stock you did your research and decided that 10 % was good profit?


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## londoncalling (Sep 17, 2011)

Toronto.gal said:


> *1.* Best strategy, and yes, make 100 shares your goal for the reasons you mentioned!
> 
> *2. *True, the div. has increased, however, to be able to DRIP, you would need at least 130 shares at current price, which is nearing $45, and more if the price continues to rise [*USD*$.35 cents x 130 sh = $45.50]. So this is not a concern as you don't plan to DRIP in any case.
> 
> ...



Just out of curiosity are you/ would you be selling in the $50 range? My target is at $60 :biggrin:


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## Toronto.gal (Jan 8, 2010)

londoncalling said:


> Just out of curiosity are you/ would you be selling in the $50 range? My target is at $60 :biggrin:


I meant that the stock should reach the $50+ range this year, especially given the fact that it's been in the high $30's and low $40's for quite some time for reasons mentioned upthread. But no, I don't plan to sell my long-term position for a long-time and don't even have a target price as a result. If you can believe it, my LT position was bought over 3 years ago prior to the 3:1 split, which in today's price, would be in the mid $30's. I have, however, adjusted my allocation along the way, ie: added shares/rebalanced]. 

But like I have said oftentimes, I trade volatility as well, and POT is a classic such stock, so in that respect, I'm not picky and sell at various prices, typically from 3% and up, which get reinvested in same stock.

As far as the AG's commission of his 12 POT shares, at his 'newbie' stage, I would consider it a well-spent tuition fee!


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## marina628 (Dec 14, 2010)

I do similar things with my trading account but I set myself targets and sell when I reach my goal.80% of my stocks are long term holds and I use my Aggressive trading account(20% OF MY TOTAL STOCK HOLDINGS) to boost my yield through the year. Of course there have been stocks I decided to hold longer and I am really wishing I stayed in grpn and continued to play my game ,would have seen another 78% ROI lol.


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## Toronto.gal (Jan 8, 2010)

marina628 said:


> I set myself targets and sell when I reach my goal.


With respect to trades, I do that as well, but for long-term holds of several years, speculating a price is simply impossible, ie: what will the price of POT be, say 10-20 years from now?! But let's speculate 4 fun: I would like to sell them for $500/sh. by 2030. :biggrin:


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## marina628 (Dec 14, 2010)

I don't have a target for my long term holding stocks I just count on the dividend payment for future 20+ years. If you want some fun then I will buy grpn on Monday for $7 and sell in july for $11


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## jmarks (Feb 14, 2012)

Oldroe said:


> You are doing amazing so far.
> 
> The very hardest lesson to learn is selling.
> 
> You looked at your stock you did your research and decided that 10 % was good profit?


+1 regarding "The very hardest lesson to learn is selling"

I used to religiously follow a +/- 10% rule when my portfolio was small and it served me well. 
Then for some reason when the portfolio grew and I had a lot more stocks I stopped doing it. One of the dumbest things I've done, and it has cost me dearly.


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## thompsg4416 (Aug 18, 2010)

jmarks said:


> +1 regarding "The very hardest lesson to learn is selling"
> 
> I used to religiously follow a +/- 10% rule when my portfolio was small and it served me well.
> Then for some reason when the portfolio grew and I had a lot more stocks I stopped doing it. One of the dumbest things I've done, and it has cost me dearly.


I agree its one of the things I still struggle with. I can't say as I have a rule other then to try and keep an eye on the fundamentals... Ie is a stock under or over valued. Selling when down 10 percent would have burned me more then once and a same as when selling when up.... Its tough. One thing I often do when a stock is up is take a bit off profit to minimize the risk.. 

No doubt selling is the hardest thing to learn.


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## HaroldCrump (Jun 10, 2009)

The Money Sense magazine has an article on the art of selling stocks this past issue:

_Investors love to buy stocks, but selling is much harder. 
All too often pride, anxiety and neglect keep us hanging onto our losing stocks until it’s too late_
http://www.moneysense.ca/2013/04/26/stocks-the-hard-sell/


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## thompsg4416 (Aug 18, 2010)

Interesting article.... 

I tend to lean toward using valuation. One the examples in the article used the CDN banks. When they get to multiples around 12 its likely a good time to sell.


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## Ag Driver (Dec 13, 2012)

I would like to thank everyone for the responses! My apologies for the late reply, but I have been crazy busy with work, and things have finally started to slow down – enough time to type up my thoughts.

First and foremost, thanks to some advice and a lot of thinking it over, I did decide to hold. I have future plans of topping up down the road when I have some money kicking around for further stock investments. I am hoping sooner than later with the current price of POT

Toronto.gal – I do like the volatility of this stock, which is another reason why I have decided to hold. I think I can potentially bump this stock up in the near future to a 50 or 100 share position for around my entry price or lower. As it stands right now (Low 38), now would be the time to top up…I just need the money!

thompsg4416 – I’m on par with you and T.Gal – With the big price swings, I feel I can hold off a little longer to add to my current position.

Oldroe – As for my 10% target, I am merely trying to beat a high interest savings account and/or GIC interest rates. 10% was a healthy profit margin that I feel is attainable, and still within reason without being greedy. I do recall my first GIC being at 8% …. 10% for some added risk shouldn't be too much to ask for 

Added to all of what has been mentioned above, I still need to learn when to sell as I have never sold a stock yet -- collecting a dividend is all too sweet! I find it difficult to look at any stock without a dividend, and I currently do not hold positions in anything that does not pay out.


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## Cal (Jun 17, 2009)

Topping up today?


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## Ag Driver (Dec 13, 2012)

I am in the process of transferring funds. So I think I will top up tomorrow morning for a full 50 shares.


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