Cold heart works best when buying, selling stocks

 

New York Daily News

When pop star Tina Turner sang "What's love got to do with it?" she wasn't talking about investing, but she might as well have been.

Experts say that one of the worst traps for investors is falling in love with their stocks, no matter how much money they make for you, or what their biggest boosters say.

John Bogle, founder of the Vanguard Group, said even the mightiest of stocks can take spectacular falls, making a once-seductive investment a money-loser. He cited General Motors, whose shares have plunged about 48 percent over the past five years.

"The idea of having a permanent franchise for a business is pretty farfetched," Bogle said.

It is particularly ridiculous to become permanently smitten with a mutual fund, according to Bogle, since their managers stay on an average of just five years.

Professional investors look at their stocks like the most ruthless employers view workers. Good performers are kept while laggards are tossed out. Emotions have no place in the process.

"It's about making money," said Kathleen Piaggesi, a Scarsdale, N.Y.-based financial planner. "If the stock or a fund is down and you are concerned about it, you need to sit back and say, `What's going on with this particular investment?'"

And be ready to dump it like a two-timing lover if you don't like the answer.

Compounding matters is the fact that advice from Wall Street analysts isn't always useful. Google, Genentech and Starbucks are all stocks that Wall Street regularly gushes over even though they haven't brought much joy lately to investors.

Shares of Google have barely budged this year, gaining a mere 1.4 percent even though most Wall Street analysts consider it a buy and have a mean 12-month target price on the shares of $565.45, about $100 more than where they currently trade.

Genentech, which trades at about $82, is supposed to hit $96 and another favorite of Wall Street, Starbucks is expected jump another $12 to $42.80. So far this year, Genentech has barely moved while Starbucks is down 13 percent.

What happened?

Well, investors are always worried about whether Google's growth is sustainable. Genentech recently said first quarter sales will be flat compared to the fourth quarter and Starbucks' ambitious expansion plan worries investors as does growing competition from McDonald's.

Remember that markets move on psychology and investors' nerves can be frayed by companies that seem invincible, such as Apple.

Shares are down about 4 percent over the past three months in part because of delays in its new operating system. Of course, the reason for the delay is because engineers working on that project are needed for the much-hyped iPhone. So far this year, the shares are up a respectable 6 percent, outperforming the Nasdaq, which gained 3 percent during that time.

This underscores why investors need to make informed decisions about their portfolio since stocks fall in and out of favor on Wall Street quicker than pop stars do with teenagers.

Read more Business Wires stories from the Miami Herald

  • Audit: NASA doesn't have the money for big rockets

    NASA doesn't have enough money to get its new, $12 billion rocket system off the ground by the end of 2017 as planned, federal auditors say.

  •  
FILE - This april 28, 2011 file photo shows Charles Thompson, of the Humane Society of North Texas, holds an albino reticulated python in Fort Worth, Texas.The U.S. Fish and Wildlife Service has proposed strict nationwide limits on importing and shipping boa constrictors and four other snake species. The rules would prohibit bringing the snakes, including reticulated pythons, into the country and shipping them between states except for scientific and educational purposes. The agency wants to prevent them from being introduced into the wild.(AP Photo/Star-Telegram, Ron T. Ennis, file)  (AP Photo/The Fort Worth Star-Telegram, )  MAGS OUT; (FORT WORTH WEEKLY, 360 WEST); INTERNET OUT

    US wildlife officials propose limiting snake trade

    Federal wildlife officials recently proposed strict nationwide limits on importing and shipping boa constrictors and four other snake species in an effort to prevent them from being introduced into the wild.

  • Tupperware 2Q profit sinks 38 percent

    Tupperware Brands Corp. said Wednesday that its second-quarter profit fell 38 percent from the same period a year ago, hurt by falling sales of its storage containers and cosmetics in North America and Germany and unfavorable currency exchange rates.

Miami Herald

Join the
Discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category