$8.25 was my target buy price going into this morning, has been the case for a couple of weeks running. But when I saw units going at sub-$8.50, I had to take a hard look at not only the unit price but also myself. My goal was to add 500 units.
Now, for every penny higher or lower, multiply it by 500 times for the final premium paid or not as the case may be. That said, an add-on at $8.50 versus $8.25 comes out to a whopping 25 cents. Multiply by 500 and we've got to pony up an "extra" $125. By holding out until units priced at $8.44, I saved myself the difference---$30.
On the other hand, what if I'd held the line for 500 units at $8.25? I'd have gained nothing so far---with thirty eight minutes left in the session. And at this moment, units last traded at $8.40, not far from my add-on price.
Holding eighteen stock picks and scrutinizing about thirty picks very closely throughout each trading day, I can't let myself get sucked into insisting on each penny as though my life depended upon it. I figure it's better to secure the positions I crave and keep in mind my longer term expectations.
I was willing to pay $8.44/unit for two reasons:
1. Who am I to assume that $8.25 is the fair price for me to pay?
2. Today's action is influenced by Alcoa's guidance and should not speak for market action going forward.
Adding things up, this tells me I should be able to unload today's 500 units for a gain in the next couple of weeks---should I wish to do so. As of this moment, I don't expect it. However, I'm feeling quite safe from market downturns. A low cost basis will do that to an investor.
