Wednesday, January 23, 2008

Citigroup, Dow swing up

To my surprise, the C trade generated a profit very quickly. After a bit of a swoon after my original purchase, the Dow managed to turn a 1.5% loss into a 2% gain on the day, implying about 250$ unrealized profit on Citigroup.

I'm caught in a decision of whether or not to take the money and run. This is definitely more luck than should be expected from such a trade. I was hoping for pretty much flat over the next week, maybe a little appreciation. At its best, C was up 10% on the day.

Two pieces of advice to conflict with:
1) Jim Cramer said that when he bought a stock for a dividend, and then bailed, he missed out on a whole lot of profit and security when the stock further accelerated and upped their dividend. So DON'T DROP those kinds of stocks!

2) There is hardly a pundit out there who says that we're not in for a long haul recession, and I've believed it myself for a while. But the MauiTrader says cover the shorts for the next little while. No matter what you say, a 6-day loss is a lot, even if we are in recession. We're due for a pop.

The dividend will never equal such a profit-- 250$. Not for a very long time and by then I'll be back to day trading. But what position would I likely put on tomorrow? Can I dump the stock premarket if things start to slide? Will I completely rue the loss of 200 bucks for sitting on this stock?

That's a problem with this trade: I had no goal in mind for profit. I think I'll sit on it for now, regroup by tomorrow.

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