r/stocks
Am I Wrong Here? Sell High, Buy Dip > Hold Through Dip at OG prices
User questions if swing trading MU beats holding, concludes holding original low-cost basis is better, while lamenting losses in INTC.
- Holding shares with a significantly lower cost basis yields higher absolute returns than re-entering at higher dip prices.
- Early entry in cyclical semiconductor stocks like MU provides a substantial safety margin against volatility.
- Intel (INTC) demonstrates significant downside risk and poor recent performance, dragging down portfolio value.
- Attempting to time market dips often results in missed upside or buying at prices still above original entry points.
To keep it short and simple (I'm more than happy to elaborate either in an edit or comment), if I bought a stock at $10 and it rose up to $30, I then sold it, and then bought it again when the market dropped and it was at $15, and I continue to hold it to whatever the end result would be, lets say $45 and then I'm out. Is that better/more profitable, then just holding all the original shares until it hits 45?
I bought MU at $450, and I took my principle out when it hit 805, now I know it skyrocketed even further, and has more room to grow, but my profit is just chilling and growing. I got in at DRAM at $45 and I'm wondering if it would have been more profitable to sell when it hit it's month high, and bought back in like now for instance.
I'm not trying to out time the market per say. I just had a hunch last week (before I even knew the job numbers were coming out, I'm completely new to all this), but the advice I've been reading is to stay. I didn't buy SPCE like everyone else said to because my gut said not too. So I guess I'm trying to algin my gut with what I know and kinda game theory some stuff out.
For me, I don't think it maths out to sell at the candle, then buy back in at the dip when I bought so early that the dip is no where near my entry price. Those shares are still more profitable then the shares I'd buy at the dip, even if i sold at the peak.
Am I wrong here?
Is this total newbie non-sense?
Someone help a brotha out!
Also, INTL is KILLING ME. I bought in at $130 my $22k is now $18k and it hurts my soul (total retail invested amount is at about 60k, was up to 70k on Monday)
Problem with trying to time the market is, you have no idea how high a stock will go, and when it finally does dip, how far that dip will go.
That said, your approach of taking partial profits makes sense. Taking some off of MU when it nearly doubled from your purchase was wise despite what happened next.
But lots of people sell what they think is a high only to see the stock go much higher, or buy on a dip only to see it go much lower. If you’re investing for the long-term, it’s far easier and usually more profitable to sit on your hands.
It’s basically impossible to do that consistently, do you know how many people sold Nvidia at 30 dollars just to watch it rocket all the way to 200 and that is the dip now. Stocks can run away from you hard and fast if you sell them and dips can keep dipping and dipping and dipping. If it were that simple we would all be billionaires
- What makes you think you can do this except in hindsight?
- How many times do you want to pay taxes?
I’m talking split adjusted obviously but you missed my point entirely. You could have missed a massive leg up. Could you have bought back in? Sure but you would have missed massive gains in the process
Yep, selling high and buying low is the optimal strategy...
The idea that your original shares are more profitable because of a lower cost basis is a common mental trap. What matters is the total value of your cash, not the entry price on the screen. If you hold 1 share from 10 to 45, your profit is $35. If you sell that 1 share at 30, you get $30 cash. Rebuying at 15 gets you 2 shares. When those 2 shares hit 45, they are worth $90, giving you $80 profit. The second path makes more money because you doubled your share count on the dip. The real issue is that timing peaks and dips perfectly is almost impossible in practice, and you get hit with short-term capital gains tax every time you sell. Are you doing this in a taxable account or a Roth IRA?
I'm not trying to out time the market per say
That is literally what you are trying to do, chief.
Since it is taxable, the short-term capital gains tax is the real hurdle. If you sell at a peak to buy a 10% dip, but lose 22% of your gains to taxes in April, you actually end up with fewer shares than if you did nothing. The dip has to be massive to overcome that tax drag.
Welcome to trading lol..
My retirement is made up of a couple broad market funds and is up 22% YTD.
My question is about the value of larger profit margins on stocks and if I understand how it works correctly. If my assessment is correct, then the whole sell and buy back doesn’t make any sense. But seeing as I’m new to retail investing, I thought I’d go to a general sub and ask a question.
From my understanding your response isn’t addressing the question, but is a criticism and talking down to me.
Soooooo, thanks for the not help?
and I continue to hold it to whatever the end result would be, lets say $45 and then I'm out.
That's a massive assumption that you're going to time that end result cleanly.
In your scenario-
Initial Entry Price: $10
First Exit: $30
Re-Entry Price: $15
Second Exit: $45
I'd say you need to do some analysis on how commonly companies triple, then halve, then triple in value again. Especially over a time frame that isn't years or decades.
It also depends - what do you think the company is worth and is it changing at all during that period. If this was a short period of time and you exited at $30 because that was the top value you had it at - assuming your view didn't change at all when it dropped to $15 or was rising again - why allow it to go to $45 for the second exit?
Whatever you decide just remember to factor in taxes.
Yes, it’s more profitable. If you buy at 10 and sell at 30 and then rebuy at 15, now you have 33 percent more shares. So when you hit 45, you have more money the second time around because you have more shares now.
But like others have said, you have to get lucky to time it. But if out had MU at 450 and sold at 805 and you buy back in now, you lose against if you had just held because it’s above 805 still. It has to drop below what you sold it for to profit on rebuy. And that takes mostly luck.
I’ve been doing this…playing the volatility for decades. Have a core position, and then buy trading shares when $ comes down. Immediately set a sell order. Once it hits, immediately set another buy order. Rinse & repeat. So, I’m in & out while it rises and if it takes off when I’m out, still have my core position. GL.
Spot on. Short term gains are taxed exactly like ordinary income, so they pile on top of your salary and push you into those 32% or 35% brackets. No FICA taxes, but that combined 45% CA drag is real. Plus, if you sell to wait for a dip and the market keeps running, you are sitting in cash losing compounding time.