Simulated Stock Pick Results... Pending

Thanks to the work going on in the basement apartment, I’ve had a hard time focusing on stocks last week. I’m only up to Lecture 13 in DeGennaro’s  “How the Stock Market Works”. Once the subjects get technical, he really does a poor job explaining things and his analogies are just weird. One can tell the guy knows what he's talking about, but his delivery sucks. He's like a really funny guy who's also an awful comedian. Last week I picked General Electric (GE) without doing too much research. I saw they had an earnings report due on Friday July 18th, and decided to buy it at the beginning of the week. I could have pulled out of the stock on Wednesday when it ended the day over $27, which would have made me a profit of about $30. But I decided to hold until the earnings report was due, and that’s when things got confusing.

GE’s earnings reports were more or less in line with estimates. Their revenue was down by $110 million, but they had all these other great things going on. They had the IPO that will be issued by the end of July for a portion of their company’s Retail and Finance sector, called Synchrony Financial. Their industrial segment was up by 7%. In fact, their Power and Water, Appliances and Lighting, Aviation, Healthcare, Oil and Gas, and Energy Management all posted increases in revenue. So, after all that good news, why did the stock only go up by .5% at the opening of Friday’s trading, and then sink down to losing .87% by the day’s end? What more does a company have to do to inspire confidence?

With my limited knowledge, I can only point to the fact that GE fell in line with estimates, but didn’t beat them. Maybe it’s not enough to fall in line with what investors expect of a company. Maybe a company has to beat estimates to get that extra jolt needed to push the stock up further. I haven’t learned much so far with this stock, as I’m gonna hold it until it hits over $27, and then I’ll sell. I’m fairly confident it will hit high enough to make a meager profit and maybe learn a lesson or two. After I sell, I may look for another stock with an earnings report due on Thursday or Friday. Right now, however, the only lesson I’ve learned with GE is to not do any more long holds. Hold a stock for one or two days? Sure. Holding a stock for three days? Maybe. But a week is too long. Too many things can go wrong, and I’m not yet experienced enough to figure out what’s what.