Let’s take another look at Veeva Systems (VEEV) (November 28, 2014)
I want to look back at Veeva Systems ( NYSE:VEEV ). When I was last looking at this stock and I mentioned this is an IPO stock; it had been cut in half and the stock had been consolidating. This is how it looked on this Friday or Thursday or whenever I looked at it last, I know it was one of these two days. I mentioned that this was a stock if you’re looking for a trading stock, this was not really you’re stock because this thing could kind of drift sideways for quite a while, you can see the general trend, it’s not a trading stock.
However, if you are patient and you just want a stock to hold this is probably a good stock for you. So if we had instead traded this stock, first of all where’s your entry here, maybe here. You’re chipping around here in a stupid 10 percent, maybe, trading range on this goofy stock; trending up above the 50-day moving average, but you’re saying okay I’ll buy this stock here. The low is 27.31 and then the stock moves up a little bit; happy, happy, joy, joy. What have you made, like 15 cents? Not even that, and the stock is grinding around here and now you’ve gotten taken out of your position.
This is what happens when you are trading a stock that is not a tradable stock, it’s not a stock that should be traded. It’s a stock that if you are going to buy it, then buy it for a reason; and that is because you’re comfortable holding it. Here’s the other thing, just about any other market commentator will give you a trading idea and you really like it. You go like, “Oh my gosh this is great,” or maybe it sucks, but lets say you like it; you have to keep in mind what you’re timeframe is, it has to be in sync with what the stock is doing.
It’s one thing for somebody to say, “Hey buy this stock right now, it’s moving.” If that’s your trade, which is fine, then if the stock’s not moving then there’s really no reason for you to be in it. Because the only reason you were in it was because quote, “it was supposed to be moving” and it’s not. On the other hand if you’re buying a stock because you think it’s a good long-term hold; it’s flitting around here, kind of moving sideways, not doing a whole lot, but you like the uptrend; you like the 50-day moving average, you like the company, you like the business that it’s in, all of this stuff.
If you like all that then you go ahead and buy the stock and you don’t sit here and watch it, you don’t sit here and, “Oh it’s up 64 cents, I wonder if I should sell? Oh my gosh now it’s down 86 cents I’ve definitely got to sell.” Instead you buy the stock, know that all of these little boxes here, the red and green ones, were made because that’s the way the prices fluctuate. The stock is actually in a tight trading range here, you want to just buy the stock, basically forget about it until, oh golly gee here the stock is, pops up, nice report, up above this last high and the very next day, which is on Friday when like nine people were trading, maybe you were one of them, the stock moves up even more but on very, very light volume.
So what do you do with the stock now? If you are long this stock I would say this, if you’re itching to take profits and go ahead and take profits, but lets go back to the initial trade. You’re not buying this stock, unless this was part of your plan, you’re not buying the stock saying I’m going to wait for an earnings pop or something, and then I’m going to sell it right away. You’re buying this stock, at least according to my thesis, because you like the stock, you like the company; you see that it was an IPO that got absolutely killed. Now the stock is climbing up, it’s making its way back up; this is a stock that you want to hold.
Maybe you sell some at 32.85 then what are you going to do? Buy it when it falls back to 31.00 or so, when it falls back to 30.00? Fine. But what if it doesn’t, what if it keeps going? My point is know what you’re doing before you do it, and then after you do it make sure you stick with doing what you’re doing. So here I think you can just hold this stock, maybe it gets a little pull back next week, but maybe it doesn’t. So you take a stock like this, you’ve got your plan and then you just execute that plan, and that is you look at this now and say, “Wow! This stock is moving in my favor.” What’s my next step? My next step is actually considering where I’m going to add more to this position; that my friend is for another video.
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