December 02, 2007

Wrapping Up the eTrade Stock Story

Last week, after many, many acquisition rumors turned out to not come to fruition, eTrade announced the company had received a $2.5 billion cash infusion from an investment group, aimed to eliminate customer concerns over potential bankruptcy. At the same time, the company's CEO stepped down.

Thursday's news initially saw the stock jump from its depressed levels, touching briefly above $6 a share, up dramatically from its nadir in the $3.80 range just a few days before. But as soon as it hit $6, investors holding out for a bigger return from a potential buy from Ameritrade or Schwab saw this as their last hope to cash in, and a rash of sellers hit the exits.

I was one of them. As soon as I saw the cash infusion would be all the news we could expect for awhile, I got out, selling all I had at $5.73 a share. Most of the shares I had purchased on November 21st at $3.89 a share, but I had doubled down on Wednesday, the day before the news, with a big buy at $5.35 a share. All told, the week's earnings, just in eTrade stock, were more than $5,600 profit. Not bad.

Of course, any time I buy or sell as quickly as I did, my brokerage (eTrade, of course) doesn't like it, but I'd rather sell and worry about tax on profits than write-downs from losses.

Was the $5.73 sale a good idea? Apparently so. By the end of day Thursday, eTrade stock had fallen down to $4.82 a share. Those 91 cents a share to me meant a difference of $4,777.50 by selling in the morning rather than waiting until the afternoon. And on Friday, eTrade fell again, down to $4.60. But this time around, despite the low price, I don't think I'll be buying. As I see it, the big news has come and gone for a while.

Now I get to figure out whether I take this newfound cash and put it into Christmas presents, or if I put it back in the market.


  1. One word. Two syllables. Google.

  2. Actually, strike that. Apple may be a better short term buy with MacWorld around the corner.

  3. We shall see. I've been an off-again, on-again owner of each (though I'm in nothing now, all cash). Apple is an interesting one, thanks to Macworld, but it won't get the spikiness eTrade did. Google's fine, but I don't see how it would go from 700 to 800 a share and then to 900 rapidly. It'd almost be better to see it drop ___REALLY LOW___ and then I could get in. But that's not going to happen. :-)

  4. NICE call :)

    I've been doing a similar practice with BIDU in the last few weeks...