The answer to that depends where you bought it and where the price is now.
I wanted to do a post to point out something very obvious – that no one ever talks about…
A good investment vs a bad investment is solely dependent on where you bought it – and where the price is now.
I like to use NFLX as an example because over the past couple years it’s been one of the more frequently discussed stocks among the necktie-wearing talking heads that grace the TV screen in my office on a daily basis.
It all boils down to this…
If you bought NFLX in the green shaded area, it’s a good investment.
If you bought NFLX in the red shaded area, it’s been a bad investment.
Drop a horizontal line at the current price on any chart of any stock and imagine that everyone that is in that stock over the line is underwater. Anyone in the stock below the line had a good entry. I shaded the chart above to help make this point.
The fact of the matter is that stocks go up and down and the only thing that matters is where the price is today in relation to where you got in the stock.
I hear too many people that “like the stock because it’s a good company”. Take a look at the little red circle at the top of the NFLX chart – it was a good company there too, making new highs and getting everyone excited at the time.
Was that a good time to buy the stock? Hell no.
A lot of people these days don’t seem to realize that no matter what the experts say, the only good investment is a stock that never goes below your purchase price. If you buy the wrong stock at the wrong time and the price drops below your buy price – there are no guarantees it will ever come back above it.
That’s what stops are for.
As hard as it is to imagine, even good companies can go down and never recover. If you don’t believe me pull up some monthly charts and look back to 1999-2000.
I could show you a ton of “blue-chip” stocks that have been epic disasters, 16-years later. They may or may not ever recover. Citigroup is a great example. I doubt it will ever hit a new all-time high in my lifetime.
As I said, I’m just trying to point out the obvious here. Stocks go up and down and the only important thing at any point in time is where the price is now, compared to your entry price. As you may have noticed, I have the memory of a cat and I could point out dozens of recommendations by the supposed experts that turned out to be epic disasters, even years later.
Don’t fall into the trap of the current narrative as far as what “they” tell you is a “good long-term investment”. Remember AMBA?
Forget about “the story” or if it’s a “good company”. The market is simply a popularity contest where stocks and sectors come and go from favor and there are no guarantees a “great stock” today will be at a higher price down the road.
Just because a company has good hamburgers doesn’t mean it’s a good investment – SHAK. (Sorry Peter Lynch). Some company with crappy hamburgers – MCD – might have been a much better investment.
It’s all about the chart – if you ask me…
“So what do you think of NFLX here Mr. Cat?”
“I’m fairly certain the price will go up and down”.