GAIN: Going According the Plan
In February 2019, I wrote that GAIN trades between $9 and $12 such that you should buy around $9 and sell around $12. I put my money where my mouth is and sold at $12. Then I watched it appreciate even further to $12.64. This chart represents GAIN’s closing price from 2/11/2019, the day I sold, to 6/5/2019, the day I am posting this:
As you can see, even though GAIN jumped an additional $0.64 to $12.64, it is now trading around $11 just a few weeks later. This is why you must stick to your plan. I sell at $12 because I believe at $12 it should be sold. If I held onto it because I thought there was more upside potential, I may have been “right” for a few weeks, but when do you sell if you don’t have a plan? $12.63? That would have been pretty sweet, but hopefully not $12.65, because if so you would be down $1.65 by now with nothing to show.
The table below portrays the monthly dividend payments and reinvestment since 2/11/2019. I think this table reinforces the theory of using Dollar Cost Averaging when investing in the stock market, which is clearly what I am doing. The DRIP buys shares regardless of the price. The average of the column Settlement Price is $11.80. So even though I bought some at $12.57 in April, the $11.15 in May (just one month later, mind you) sort of balances it all out.
The second item I’d like to discuss is the Yield. As you can see, if the price goes up, the yield goes down and vice-versa. When this stock trades with a yield greater than 7%, I think it is a good buy. So, in theory, if I had a wad of cash, I may start buying GAIN in monthly or two week intervals. For example, if I had $5,000, I’d probably buy $500 every other Thursday for 10 periods. This allows me to average out the cost of GAIN. Today may be the lowest OR highest it is ever going to be. However, you win both ways. If the price goes down, you get more for your money every period. If the price goes up, you locked in a great $500 at $11.15 and can sell it when it appreciates..
Below are my APLE and PFLT tables as well. My plan for both of these is to continue to let them DRIP and hopefully appreciate. Once I make 15% in appreciation, I will sell off the capital gains and diversify the funds.