This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Hooray for Facebook -- and I'm Selling

Stocks in this article: FB NFLX LNKD

NEW YORK ( TheStreet) -- Back when I was a financial advisor, the seasoned stock market veterans would say confidently, "Buy the rumor and sell the news."

Perhaps the latest version of this adage is "Buy the scary rumors and sell the big upside earnings surprises." That's what I did lately with my shares of Facebook (FB), and I won't be looking back.

Having purchased shares at $28.76 only to watch them fall below $23 didn't bother me that much since I had a stealth 25% trailing stop-loss alert set up.

If shares had fallen to around $21.57, I was going to act on my convictions and cut my losses. Thankfully, shares drifted higher before I hit that 25% trailing stop loss, and Thursday, July 25, they spiked 28% higher.

Normally I would have tightened my stop loss down to 15% to protect my gains, but I realized if I did, with the price at $33.68, and assuming it was a temporary top, I'd be stopped out below the price I paid for it. So I locked in my gains by selling.

My crystal ball is still at the repair shop and I don't know if FB shares are going higher from here or not. With shares now trading at a PE ratio of around 259 and the share price up almost 50% since the June 6, 2013 intraday low of $22.67, I chose to sell. If I owned a substantial position I would've only sold half.

Alas, my meager position wasn't large enough, in my estimation, to split, so I parted company with all my shares at $33.68. My premise for selling is based on Newton's Third Law of Motion.

Sir Isaac Newton may have been a stock market investor, but even if he wasn't, his Third Law of Motion spoke to me: "For every action there is an equal and opposite reaction."

Time will tell me if my instincts about Facebook were correct. If the stock keeps going higher, I'll be chastised by Newton's First Law of Motion, sometimes referred to as the Law of Inertia.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs