Learning the Hard Way
I bought shares of Sirius XM Holdings and Taser International at their highs. I don’t think they will ever get where they need to get so I can get rid of them. I paid too much for both, and I just keep holding. Oh well, I’m learning. — D., online
The Fool Responds:
Your story offers several lessons. First off is the importance of patience. Taser, which has been redubbed Axon Enterprise, is still underwater for you, but Sirius is up about 23 percent as of this writing, since you wrote to us. Stocks rarely behave exactly as they’re expected to.
Next, don’t think so much about a stock’s highs or lows. A stock that has fallen to a 52-tweek low can still fall further, while a stock that has doubled or tripled can still keep rising — over the short or long term. It’s more helpful to try to figure out what a given stock (one tied to a healthy and growing company) is really worth and then aim to buy when it’s undervalued. That way it will be more likely to rise in value than to fall.
Finally, if you have little faith in any holding, unload it — no matter whether that will deliver a gain or loss. Whatever money is left in it can be redeployed into a stock in which you do have a lot of confidence.