NEW YORK ( TheStreet) -- Tell me if you have seen this movie before.A common mistake by traders and investors is chasing stocks. The excitement and the worry over missing out causes a rash decision and you push the "buy" button. Now you own the stock. In an instant you receive the "order filled" message and simultaneously the price begins to fall, as if your buying caused it to happen. For the rest of the day the price continues to fall. "OK," you say to yourself, "I will give it one more day," to which you find holding another day results in a greater unrealized loss. Within a few days you're so frustrated that breaking even is appealing. After a week or two, the once-bullish darling is finally approaching your breakeven point, and you stare at the monitor as if to use the "force" to lift the price higher. The stock price may get close, even within a penny or two, but sure enough, down it goes, leaving you with the feeling of "if only I lowered my offer price below that round number I would have exited with a loss of a penny or two." Not wanting a repeat, your next step is lowering your offer price a few cents "under" the round number peak from earlier. Sure enough, the third time is the charm and all is well again in the world because you're finally rid of that last embarrassment, while simultaneously promising under your breath never to do that again (for the 10th time). If you thought you were frustrated before, now you're in for a real treat. The stock you just exited out of for a loss of a few cents continues higher. During the same day you let your shares go, the stock closes another point or two higher. For the next four days, you watch in anguish as it becomes the Energizer bunny on speed as it keeps going and going.
Eli Lilly (LLY) Background: Eli Lilly discovers, develops, manufactures and sells products in one significant business segment --pharmaceutical products. The company directs its research efforts primarily toward the search for products to diagnose, prevent and treat human diseases. The following link is to a great
Johnson & Johnson (JNJ) Background: J&J is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. J&J pays homage to investors with a dividend yield over 3.6%, increasing an average of 9% a year in the past five years. If that doesn't say it all for J&J, little else will. Of course, if the dividend is at risk of decline, we could end up as a bag holder, so let's take a look at the payout ratio. J&J's 3.6% yield is based on a yearly dividend of $2.44 per share out of profits that are estimated to arrive at over $5 per share this year. With a payout ratio under 50%, a dividend hike is more likely than a decline. For me, the most worrisome issue is the current proportion sold short. J&J's float has a 6.8% short interest. That's a little high for a big dividend payer. Even though short sellers are smart money, they don't always get it right, and I believe this is one of those cases. I was watching Tuesday for an entry signal. As I write this article J&J is trading higher. By Wednesday, we may have a buying opportunity, or another one to keep on the radar for now. AAPL data by YCharts
Apple (AAPL) I write often about Apple and its investment attractiveness. Everyone loves Apple, with good reason (well, maybe not the unfortunate ones who sold before $400). I believe Apple is one of the most undervalued large-cap companies. It may be a bold statement given the price and a stock chart that could easily be mistaken for an Evel Knievel motorcycle ramp in front of the Grand Canyon. The fact remains that Apple continues to perform quarter after quarter, as you can see in my last Apple article
TheStreet's Christopher Versace's
General Electric Company (GE) I like GE, and the 2009 meltdown that had many investors worried if GE would make it through to the other side appears to have dissipated. Here are two recent articles I wrote on GE you may find of value to your portfolio: