In yesterday’s post, I indicated that if Union Pacific’s share price drops to $156.79 that the fund would use its excess cash to purchase shares. Well, today at 10:35 AM it did drop to $156.39. Therefore, I used all remaining cash to purchase 8.268268 shares (includes $1 per share cost to make the purchase). If you read my article: Union Pacific – Buy/Sell Model you would understand that I use a 17% price change requirement to buy. With Union Pacific, this occurs about once every three years and it just did, driven by the market scare with coronavirus.
If you read the value investing principle related to Union Pacific, I will sell this stock when it hits 96.6% of the prior high of $188.96. This means I will sell when the share price rebounds to $182.54. I expect this to happen no later than May of this year (gives time for the market to recover from the virus scare and for the 1st quarter reports to be issued by Union).
Just for the purposes of making sure readers understand:
- This fund has no real cash invested. Therefore, I actually DO NOT own any railroad stock. This series is written to vouch my decisions based on the model and corresponding sub-models (for each stock). There are multiple articles related to this with this series.
- It exists to prove a theory that value investing is a superior form of investing with reduced risks. If you read the series from the beginning, you will understand.
- I do not own railroad stock and I caution every reader that you must be well versed in market terminology and the associated formulas (which I do write about) to invest in any publicly traded instrument.
- Investing in the market is risky and as such, I implore upon readers to learn first and only risk a small portion of your assets in open market trading.
- I am not advocating or pushing readers to buy or sell their investments; seriously, Class I Railways are all in the top 500 companies in the market. There is no way my opinion can influence others, it is merely provided to validate my value investing concept. You can lose money, but not all of it; I don’t gain from saying buy this or sell that. The only form of payment I get is maybe the .4 cents for those ads on the right hand side over there.
As stated multiple times, the key to value investing is patience. You set the buy sell points based facts including business ratios. You then simply wait and it will happen. ACT ON KNOWLEDGE.