So basically here's my thinking on the process. If I look at a stock it's wherever it's at, if I buy it and wait for an earnings report, it could go up 5-7-10% or down the same amount.
I've tried to speculate and pick ones I thought were going to jump, like FB for example, but if they're good solid companies then either the growth is priced in already so it's fairly stable, or there's some movement going to happen because of the crowd rush, but it could go either way. So I think well hey why risk 90-95% of the money when it's a coin toss?
When I bought GILD last quarter and bet on earnings, they were high, and dropped like 5-7% overnight, damn, so I'm not doing that again... Or so I thought. This time I bought FB and QCOM and MMM, and AAPL, guess what, nothing much, they dropped 2-3% and that was it. What a waste.
Now if I don't buy and it goes up, ok I missed on upside potential but I still have my capital. I didn't buy SBUX, or eBay, or McD's, etc and missed out on 5% overnight gains I could have sold off.
If it goes down, I think ok well this is a good solid company here, they've dropped 5-7% or even 10% overnight, well that seems unfair. But why? If it's something like I said about AMD where it may be that they're off strategically, there's a year long forecast that's been lowered, more competition, supply chain issues, etc, then those are more real causes for concern IMO, but I'd still consider buying in becuase I'd rather buy something that dropped 7% and wait for it to come back 2-4 weeks for it to slowly come back to where it was yesterday before the report, than buy something 'high' and hope it goes higher.
Sure this is still just a roulette game, but I'm assuming people are more likely to panic and sell hard and cut 'losses' whereas on the upside they may start to slow down and take their money off the table.
Now as part of the strategy what I've seen is that in general if overnight there's been a big drop, usually it recovers quite a bit over even just the first day. Now in the past I would just buy in full first thing but I've also seen that sometimes over the first few hours it might drop more, or take more like 5-10 market days to 'recover'... So now I put in about 2/3 of my allocation, give it a few hours and if it's still dropped i might add in the rest.
Where has it 'worked' so far?
TSLA - planned to buy under 200. Bought some at 199, then a few at 195, then I overextended and bought some at 190 and then I was tapped out... it went to 185 and I got scared. Now it's come back up. I sold a lot off at 210-215. If it goes up more I'll still have a little less than my original position, if it goes back under 200 I'll start to lean in hard again. This wasn't a major dip but it was relatively sever and I didn't feel it was based on anything real, just pure speculation so it would come up quickly as soon as there was any evidence or real news.
UBNT - As mentioned above. Overnight drop. Bought in 2/3 first thing. Waited but it never dropped further. Eventually came back up to original value and I sold it. I wish I'd bought more but that's the price of keeping some aside for a rebuy option. Admittedly I don't know enough about this company, but it seemed like a very large drop that was sharp and pushed it way below anywhere it'd been for a LONG time.
Where did I mess up and why?
NBG - bought some at 1.5, then it dropped, so I bought at 1.20, then it dropped, then I bought the final amount at 1.10 and now I'm holding and hoping. If it hits 3-4 I'll probably sell. This is a total gamble. But basically i've averaged down the cost and there's a lot more upside than downside. Again, here it's been a very sharp decline and for good reason, so this one totally hinges on specific real news and there's totally a chance it'll go bust, so this one's riskier for sure.
COS - dropped sharply, and for good reason. I bought at around 11, spent too much, watched it drop to like 6-7 and wasn't ballsy enough to buy in more. Now it's up to just past where I bought it. Now if I'd doubled down at the 6/7 mark, I could have sold that portion off around now and moved the cash to other places and still retained my original position. There were sever drops and I didn't buy into them.
LL - also see CMG below. I saw a huge overnight drop, figured hey it's a 60-70 stock, now it's at 50, and omg it's at 40, I'm buying. So I thought that going from 70-60-50-40 it'd been punished enough. I bought some at 40 and then watched it drop to 30 and under. So a loss there becuase I thought it had seen the end and it dropped further, but more importantly, when it leveled out and stayed stable just around 30 I should have doubled down and averaged out to 35 and held it. Instead I'm now holding my 40 buy in and that's it so it's down but I could have cut my losses in half.
BABA - learning from the missed lesson above.... I saw a 100-120+ stock drop to 90. I thought great, these guys will do well and this is unfair, so I bought at 91. Then it went down, and down and down... now it's sort of stable at 82ish and rising, so I doubled my position at 82, average cost now 85/86 and when it gets to there I'll probably actually sell it all off and just break even on this and move on... So sort of a 'loss' in terms of a breakeven exit and some stress for nothing, but if it goes back to close to 80 I might buy back in.
CMG - tough one here, it's just such an expensive share there's not much wiggle room. I saw it go from 690 to 655 overnight. Damn. So I bought a few at 653, then it dropped and dropped but I was already tapped out, so I bought a bit more at 637 but it's mostly a loss at this point. I'll hold and this may be a long waiting game for 700 again.
NDLS - some tiny random shit company, who knows. I just saw them go from 24/25 per share to under 20 because of a bad quarter report, so I bought a little at 19. And it slowly went down to 17/18 and then just went nowhere.... it's slowly coming up but basically just going nowhere. I'm holding it becuase big upside potential still but I want the money back to use elsewhere.
YELP - I don't quite remember on this one but I think it was right after the big dip, bought in some, it stalled for a while and is slowly recovering but it's taking a while...
AXP - huge overnight drop, it's quite possible their strategy and future are failing. I bought in at 77.5 or so, I think it's holding steady and let's see how we do. This one is sort of risky becuase maybe their future is uncertain, then again it's AMEX, they're still in business... but so far so good....
HOG - Big overnight drop again, bought at 55.5, so far holding steady and I think rising. Now they cut their longer term forecase, but I think they're still well positioned and it'll go somewhere. but so far so good....
EPZM - bought in when it dropped to around 19/18, had the one day crazy pop to 25, sold it, and waited, and now rebought back in at the 19 and still waiting for the 25 pop again... but so far so good....
PCP - bought it around 204, saw it come up and sold it around 215 I think, now saw it drop fast again to 200, just bought in again and will hold. but so far so good....
Remember, poor people think about how much they can lose, about downside, rich people focus on ROI and potential returns. I don't have a lot of money, I really hate to lose any of it, but when I see huge upside potential I'll take the risks. NBG, COS, AMD, EPZM, etc.