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According to several sources, Vonage (VG) is quite undervalued. I bought at 2.47, but it has been going down, now at 2.25. I also found out too late (this part my fault for not doing enough research) that their CEO Citron Jeffrey has been selling batches of 100,000 shares just about every week since last fall. The guy also has a bad reputation for fraud. Still, people say the stock is undervalued and should go up. the question is: when? and is it worth risking and waiting?
Almost seems like they're purposely pushing down the stock price with insider selling. Should I take a loss and learn? or does anyone think it's worth holding?
According to several sources, Vonage (VG) is quite undervalued. I bought at 2.47, but it has been going down, now at 2.25. I also found out too late (this part my fault for not doing enough research) that their CEO Citron Jeffrey has been selling batches of 100,000 shares just about every week since last fall. The guy also has a bad reputation for fraud. Still, people say the stock is undervalued and should go up. the question is: when? and is it worth risking and waiting?
Almost seems like they're purposely pushing down the stock price with insider selling. Should I take a loss and learn? or does anyone think it's worth holding?
Maybe he sold to fund his retirement, or to buy an airplane, etc.
Insider buying is more predictable than selling.
If you and me have the right to sell shares and take our profits, why should the CEO not have the same right?
well, not that many, only 1000, but still, it worries me that this thing doesn't seem to go up at all, only a steady downward trend. Also the bit about the COW being fined $22.5 million by the SEC back in 2003 for fraud, not sure how I missed that, but I woulda never bought into this thing if I knew that.
well, not that many, only 1000, but still, it worries me that this thing doesn't seem to go up at all, only a steady downward trend. Also the bit about the COW being fined $22.5 million by the SEC back in 2003 for fraud, not sure how I missed that, but I woulda never bought into this thing if I knew that.
If the stock is $2.25 you have lost $202.00.
That is not much at all.
You could sell your stock and pay about $150.00 for 10 of the Sept. $3.00 call options.
In case selling your stock is a mistake then, what happens?
If selling your stock is a mistake, it will go STRAIGHT up, and the option let's you participate in 1000 shares.
If it is not a mistake, then it goes way down and you lost $202.00 + $150.00.
oh well, I guess I'm just trying to learn from this and figure out whether I should bail or hold. and I guess I don't have $20k to lose so $200 matters, but then I can't say I'm not willing to risk. It's the name of the game.
Howard, it sounds like I need to read up on this options thing, I'm not sure I totally understand how it works, but I can see that it does reduce risk. Thanks for your input.
oh well, I guess I'm just trying to learn from this and figure out whether I should bail or hold. and I guess I don't have $20k to lose so $200 matters, but then I can't say I'm not willing to risk. It's the name of the game.
Howard, it sounds like I need to read up on this options thing, I'm not sure I totally understand how it works, but I can see that it does reduce risk. Thanks for your input.
You own 1000 shares of VG.
An option gives the person who buys it, the right to do something, by a certain date.
If you bought 10 of the Sept. $3.00 call options on VG, you would be buying these rights:
1. You have the right to purchase 1000 shares of VG at $3.00 between now and Sept. 21st.
You do not have to exercise your rights. You can just sell the options if they have a profit.
But, if you sold your stock and it was the biggest mistake you ever made, the stock would go to $10.00. Right?
If so, and you owned 10 of the Sept. $3.00 call options, they would be worth $7,000.00 if the stock went to $10.00 by Sept. 21st.
And they only cost you about $150.00.
But, if the stock stays under $3.00 by then, well you lost the $150.00.
But, if the stock stays around $2.25 for the next 7 months, can you afford for it to sit there, and do nothing but go sideways?
If you think you made a mistake you can cut your losses, or the next time the stock hits $2.47 sell immediately. THEN, maybe buy some options, in case the stock keeps going up.
1. Decide how much money you are willing to lose incase your entry is wrong and the trade goes against you. Some people are willing $1000, 45k, or just $500. For me if I am losing $250 on any trade, I will sell. No ifs and buts about it. Period. Why do I need to lose more than $250 just tell me my entry in this investment is wrong and the market went against me. I can always reenter the trade once the market thinks its valuable.
2. Choose your entry carefully. This will require some technical analysis work. Its not all about fundamentals of a company and buy and hold and hope. You have to know the sentiment of the market and where the SPX high and low points are. Are we in uptrend or downtrend market? Am I investing on the top or bottom of the trend? Buy any stocks now is pure risky for holding and hope.
3. Understand that buying any stock less than $10 adds to the risk. Buying a $2 stock is pure high risk and there is a problem with that company.
I am out of market with a $400 loss since Monday. I saved myself $1200 buy exiting early. I can always get back in at lower price once I see the market reversing back to upward trend to possible 1400.
Read the Discipline Trader. There will be losses, the key is having more profits then losses.
First of all, if you bought VG because you feel it's undervalued, then hold on to it and wait it out. The theory behind value investing is that you buy an undervalued stock and you wait for the share price to rise and reflect the companys true value. If this is how you plan to invest, you need to be prepared to wait. And if you REALLY consider the stock to be undervalued, then before buying, ask yourself this: If I buy this stock now, will I be comfortable buying more after an additional 10, 15, 20% or greater drop? If you can't answer yes, then don't buy it at all. After all, as Warren Buffett likes to say "If you liked it enough to buy it at $2.47, you should LOVE IT and buy more at $2.15, right?" Look for undervalued stocks in companies with solid balance sheets that pay decent dividends while you wait for the market to realize true value, and apply a patient and disciplined approach to it, and you'll be succesfull way more often than not. Best of luck with it.
Last edited by treasurekidd; 03-06-2012 at 07:28 PM..
Good points Darrell. I'm a newbie trader myself. I'm not advanced enough for individual stocks yet so I just watch and try to anticipate the broader markets. Unfortunately, I miss rally in equities and have been waiting on a significant pull back to jump in but I'm worried that the markets are topping out in the short & intermediate term and may go sideways. The Transports fired the first warning shot, the Dow has been lagging the S&P and Nasdaq 100. The Russell finally cracked, now the other markets have followed suit. I'll be watching the EUR/USD tomorrow for signs of a reversal to the upside since equities seem to follow it and I'm going to be watching the VIX. I'm not really feeling going long on oil. This "iran" risk premium isn't worth it for me. Precious metals ..... nope....
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