I began investing in March 2010 with 3 companies, NFLX, CSTR and SAM. Since that initial buy of 4 shares of NFLX at $69.00 each, I've subsequently sold them at $137.09, bought the 4 back at $150.33, and then sold them again...3 shares at $237.60 and 1 share at $285.76. Is your head swimming yet? Do my actions completely confuse you yet?
Does it confuse you further to know that I bought 3 shares yesterday at $116.36?
First lesson...You can't earn money without spending money...and I don't have much to spend. For most people buying 3 shares of a stock is plain stupid. But alas, this is the money I have handy, and I'm not willing to gamble with my money marked for loans, or a new pair of boots. Anyway, it's stupid to buy only 3 shares of something because those 3 shares need to absorb the $14 in trading fees ($7 to buy, $7 to sell). This means that in order for me to break even, I have to sell NFLX at $121.03. My actions indicate that I believe that NFLX will perform at least to that extent.
In hindsight, I should have bought more shares of NFLX when I first purchased it at $69.00. However, it was my first purchase in the stock world, and I was afraid. I was irrationally worried that my hard earned money would go poof and disappear into thin air overnight. More so, I really didn't understand what I was doing, didn't consider the fees, and just wanted to dip my toes into the water.
What made me sell the final times at $237.60 and $285.76? I saw a lot of growth in this company (online streaming, expansion abroad, savvy deal-making), but the growth in the stock price just seemed too good to be true. It made me nervous that the stock price was going up irrationally, and hadn't I already made enough money? I remembered that I only make money if I walk away from the table when I'm up, and I sold.
Getting back to the point...why did I buy NFLX...again? Well, when it comes down to it, I still believe in this company. They were the innovators in this industry that revolutionized the movie-rental business. Their company had the brains and talent to get it this far, which says a lot. As a consumer, I still have my account with them, post-price hike and post-Qwikster-debacle, because I was too lazy to discontinue and find another company to get DVDs and stream with. I think probably most customers also were too lazy to switch. I forked out money for the price hike, because when it comes down to it, I'm not fully satisfied with the mail or streaming plan alone, and I don't want to give up either. I, like many other "kids" my age, don't have a cable bill and don't have a land line, so NFLX is right up my alley. Without my Netflix subscription and my iPhone, I'd be bored.
Yesterday, I read an article about a NFLX-backed bill that would allow Netflix/Facebook integration. I think the people at NFLX are working hard and are still trying to innovate and improve their product. To a large extent, I trust this company to figure it out and make good money. Most of investing, despite all the technical numbers and analysis, is not rational. My decision to buy yesterday is based on 3 things...1) the fundamentals of this company (the ones that I understand, anyway) still look strong 2) I feel $116 is a good price 3) I like Netflix as a consumer, and I want to keep my business with them.
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