It occurred to me that I needed to further explain what I mean by the term “buy around” or “sell around” when recommending that you purchase shares of a PeakStocks.com portfolio recommendation, or when selling one.

Just The Basics

When I put out a buy alert on any company in the PeakStocks.com portfolio, it is with the express intention that I am about to buy it, and I am letting my readers know at the same time. The same goes for sell recommendations.

If this alert were sent out during the week while the markets were open, the same would apply.

Basically, I am about to hit the “buy” or “sell” button in my brokerage account, and want everyone to do the same because there is a compelling valuation or price occurring right there and then that needs to be taken advantage of.

Now, that being said, there are some things to keep in mind before, during and after you decide to purchase shares in any company that I recommend using the “buy around” price:

• Don’t try for the “buy around” price: You will NEVER get the stock at that price, so don’t even try. Round numbers are almost impossible to get when buying and selling stocks, and the few pennies you might save in doing so is NOT worth missing out on a nice discount.
• Use limit orders: Especially with the micro-cap and small-cap stocks that I recommend, you’ll get taken to the cleaners if you just issue a “market” order. A good strategy to use is to basically cut the difference between the bid (sell price) and ask (buy price) when placing your limit order. For higher volume stocks, this isn’t a problem as their bid/asks are usually within $.01, but on smaller stocks, watch out! This difference can cost you 5-10% right off the bat! Protect yourself from getting screwed by the market makers.
• Don’t be a penny-pincher: Let’s say you decide to purchase a stock that I recommended, and the stock is at $31 per share and I said to buy for anything around $30. Buy the shares anyway.

Remember, first of all we are buying only 1/3 or 1/4 position usually, so even if you get 1/4 of your position for $31, you can still cost average if it falls below $30 again! If the stock takes off, and hits $40, and you didn’t buy because you were pinching pennies, you are going to be very angry with yourself for being greedy. A good rule of thumb is to go ahead and buy the position if the stock is within 5% or so of my recommended price, and up to 10% for more volatile or beaten down stocks, especially those with extremely low volumes.

This holds true on the upside OR downside. If I said to buy a stock around $30 per share, and it is at $25, then you better buy 1/3 position, instead of just 1/4! This is the market giving you free money and unless you hear otherwise from me, this is good news that allows you to pick up shares below where I thought a fair price was to begin with!

• Over time, it won’t make that much of a difference anyway: Let’s say the stock was already at $31 per share, when I said to buy at $30, and you decided to “wait for a better price”.

Then, over the next 6 months, the stock steadily rises to $45 per share. Those of us that bought at $30, $31, or even $32 are sitting on some nice gains. Over the long term, if the stock goes to $60 within a few years, will you even remember that you didn’t get any for $30 and instead had to bite-the-bullet and buy some for $31 or even $32 per share? Probably not!

• Relax, we’ve got time: As with all decisions, take your time. Analyze the stock, the risks, read my research reports, my blog postings on that stock (in the right-hand column all articles from a particular ticker will always be displayed) and make up your own mind. If you don’t buy right when I said to, that’s OK The most important thing is for you to feel comfortable with your decision and never rush into anything.
• When I say sell, SELL! As opposed to the “Buy Around” price, when I put out a sell recommendation, I mean sell right then and there, no matter what the price was at when I recommended selling it. If I am telling you that a stock needs to be gotten rid of, just dump it. You may be really sorry if you try and stick it out to get a few bucks extra upside. The “Sell Around” price is the price at which I recommended selling that particular stock.

Some Strategies To Getting A Stock At The Right Price

Here are some things you can do to ensure you get the stock around the price that I recommended it:

• Be around when I send out my latest blog updates and buy recommendations: That’s the point of this site! To help you invest and make money, and part of that is taking advantage of opportunities when they arise. Most of the time this won’t be an issue, since stocks rarely move so fast that you can’t take a few days to analyze my recommendation and decide for yourself, but be ready to pounce when the time comes!

• Stay vigilant: Although it’s probably a good idea to buy some stock of a recommendation at or around the recommendation date (even if you buy less than 1/4 position), stay vigilant and watch the stock. There will most likely be another buying opportunity because very rarely will anyone ever get in at the very bottom of a stock’s downtrend, or sell at the top. Just pay attention, set alerts for yourself in your brokerage account (or for free on Yahoo! finance), and be ready to act if/when the chance presents itself to buy a stock at around the price my valuation and research deemed was a fair price.

So That’s It?

Yep, that’s it.

I wanted to make sure that I made it completely clear what I mean when I say “buy/sell around”.

Just stick to these suggestions, and over time, you’ll fill your portfolio with great companies at great prices, over different time-frames and really boost your total gains through a more relaxed and patient approach to buying stocks.

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