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Why Do Stocks Always Tank Right After You Buy Them?

I used to listen to the controversial radio show of “shock jocks” Opie and Anthony all the time.   Even though they might be known to the general public as shock jocks, they were actually some of the most intelligent DJ’s to ever host a radio show in my opinion that involved not only banter and jokes but a lot of talk about current issues and movies and other things.

One thing that Anthony Cumia, who of course probably had some pretty good financial success from the show (which is now on satellite radio after they permanently lost their terrestrial radio show), made one comment that not only made me laugh, but resonated as 100% true for me too.

He said “Why is it that every GD time I buy a stock, it tanks the next day?”.  If he could have taken a page out of my investing history, that would be it.  I invest my own 401k retirement money in an account I have set up to self-direct mine and my husband’s retirement money.

I love having total control over my investments and being able to pick individual stocks and ETF’s. If you read up on this kind of stuff, you can actually do pretty well for yourself if you have good hunches or feel confident about certain stocks or investments. Of course, the stock market is risky, so one wrong call or a company going belly up and you could lose your shirt, so it’s important to diversify your portfolio as much as you can.

That’s the rule I try to follow in our account.  However, if I find a stock that I really love, or an Exchange Traded Fund (ETF), I’ll buy quite a bit of it. The last time I did that, my stock I picked literally went down by $7 in a month’s time period. That’s a lot because the price of the stock wasn’t above fifty bucks to begin with, so percentage wise, my retirement account took quite a hit.

However, I still believe in the stock, and I’m sticking to my guns. My research tells me that this is a temporary glitch based on factors that are both outside of my control and the company’s, and I still feel confident in future indicators that this stock will see much better days in the following months or years.

Plus, it pays quite a handsome dividend, which will only add to my earnings and benefit us the longer we keep it in our accounts. In the meantime, you kind of have to bite the bullet and wait for the agonizing period of seeing your 401k look like it’s been decimated.

I still believe in buy and hold to a degree even though so many experts are playing that mentality down in this “new day and age”.  And this stock is a buy and hold in my opinion!  Sometimes in investing, you have nothing to go on but your research and your gut instincts, and this is one of those times where I have to swallow my fear and just hang on for the ride.

 

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