Ike, In my discipline on long stocks, I do a silly graph of two lines, best scenario, avg. scenario, from the current price to where I think a stock should sell in two or three years, depending upon the maturity of the firm. Based upon that, if fundamentals stay the same, I would sell the first third when it hits that avg. line, the second third when it hits the best scenario line. The last third is more a seat of the pants gut feeling.
The future price goals will change based upon the fundamentals, both how strong they are and how soon they start to unfold.
In my avg. scenario, I had Vaso at $15 in mid. 2002. But the rise was so fast that the stock crossed both lines quickly. In this case, I did not follow my discipline and paid the price. I have deviated from the discipline before, with both good and bad results. I don't really limit myself, but I like to at least sit down and ask the question if the discipline says to sell some. This time I let my gut rule my head. I don't feel too bad, as I did not go on Welfare as a result, but I have not dumped the discipline in other trades since. <g>
It is really a very flexible discipline and I have to be careful to distinguish my gut feelings from fundamentals. I think the fundamental developments on VAso have been terrific, but they have not really exceeded my original projections. So I should have taken a Pepcid. <g> |
