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Thursday, January 15, 2009

I'm No Bernard Madoff: Bank Of America (BAC) and Investing Emotion

"The real and effectual discipline which is exercised over a workman is ... that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence." - Adam Smith

Some time ago I very publicly stated that I was going to use 3% of my cash to buy some Bank of America (BAC) for my personal accounts, and I listed my reasons. I bought in at $30.55 and I accumulated some DRIP'd shares afterwards.

Well. Bank of America (BAC) is in the dumper at $8.32 a share now.

So now what? Do I sell? Will I hold? Well, I won't tell anyone else what to do with their assets. But I'm holding. All the way to zero. Simultaneously, I will decrease the size of my Bank of America (BAC) holding. How do I do that? What about the emotions of this failed decision?

I discuss that in this vlog entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click This Link ...)

Here is the link to the version of the video.

It's a basic risk / reward ratio. Whereas in my trading pursuits, I'm happy with a reward of $2.00 for every $1.00 risked? In my investing pursuits, I seek far higher returns, due to the ability to compound returns through DRIP.

Don't forget the Blog TV Show, Friday, 5:00 pm EST ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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