Feelings Nothing More Than Feelings

Aug 21st, 2009 – Comment

Hello Mr. Schizas… I would appreciate …your opinion on my intention of getting out of Agrium temporarily. Got in at approximately $35US. I have a “FEELIN” that things may soon hit a downdraft, seeking some sort of consolidation, and then proceed to slowly edge upwards.Agree or disagree? I realize that it is never a bad […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hello Mr. Schizas…

I would appreciate …your opinion on my intention of getting out of Agrium temporarily. Got in at approximately $35US. I have a “FEELIN” that things may soon hit a downdraft, seeking some sort of consolidation, and then proceed to slowly edge upwards.Agree or disagree? I realize that it is never a bad idea to take profits but I don’t want to miss any either. After all I am a HAPPY CAPITALIST.

Thank you in advance for your time

J

Hi J,

Thanks for the assignment. It gives me an opportunity to address not only the case for a buy, sell, or hold on Agrium but also the issues of emotions and profit taking.

I have long advocated that if you feel like its time to sell then you should throw to cash immediately. When your emotions are generating a sell signal don’t ignore it. By going to cash on a position you have gone to safe harbour where you can preserve capital and wait for the market to give you more information.

Even if a stock continues in an uptrend after you have sold you can buy back in at a point in time when your view is not clouded by uncertainty. If you are interested in working with a trading coach who can help you better understand the psychology of trading send me an email and I can wire you up to seasoned trainer.

As far as the desire to not miss any profits you have to keep in mind that its very difficult to get every last dollar out of a trade. Warren Buffett has made a pretty good penny getting in late and leaving early so please keep that in mind each and every day you have your capital at risk. A profit booked is better than a managed retreat.

agu31

Lets look at the case for Agrium Inc. (AGU NYSE) which is also listed on the TSX.

The three year chart shows that there is resistance at $5o which AGU has tried to get through three times since June of 2009. There also seems to be support at $40 which suggests a trading range that should be managed.

agu2The three month chart gives a better view of the short term pattern of resistance at $50. The MACD generated a buy signal on July 14 and is now turning lower.

The last candle stick also indicates that the market as a whole shares in your uncertainty as to the direction of the trend. Also keep in mind that September can be a cruel month for investors. Finally not to put too fine a point on it but with an entry point of $35 you are sitting on a 36% return. Make sure to book some of those profits so you can buy a hat or something.

Happy Capitalism!

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