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Non-Tech : Parlux (PARL) Fragrances
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To: Wayners who wrote (362)3/23/1997 1:59:00 PM
From: Stingray   of 527
 
Wayne,

I've seen people get burned by playing trading ranges, in one case a stock bounced between 30 and 40 a few times and one of my co-workers bought in at 31 hoping for the bounce, the stock then fell to 17! If you sell at 3 you are relying on two more events happening, namely the stock goes back down to 2 1/2, then it goes back to 3, I'd guess that the probability of both those events happening is less than 50%.

My reasoning for buying in at around 2 1/2 was simply this, if I didn't already own the stock then I would for sure be buying it based upon what I know about the companys finances. Already owning the stock made me less likely to want buy more but I saw the possible reward as being worth the risk.

I do have the possibility of selling my original shares after 30 days (to avoid the IRS wash sale rules) provided the stock is not below 2.5, take a tax loss and hold on to the remaining shares but that only pays off if I plan on keeping the new shares till next year and even then the tax saving is only enough to cover the commisions.
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