Visa: Why I Sold All of My Shares

by: Robert Freedland June 12, 2008 | about stocks: V    

Robert Freedland

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Fortunately, I don't often write up a stock like Visa, which I just reviewed on May 29, 2008, suggest a "Buy" rating, buy shares of the stock and then, two weeks later, sell them. However, that is exactly what has happened!

On May 29, 2008, after a partial sale of Copart (CPRT) on a gain, I purchased 70 shares of Visa (V) at a cost basis of $86.03. Yesterday, with the market once again under pressure, Visa shares were selling off, and as I wrote this post, were trading at $78.14/share, down $2.17 or 2.70% on the day. When they passed my 8% loss level, I initiated a sale and sold all 70 shares at $78.99. This worked out to a loss of $7.04 or 8.2% since purchase.

Without anything fundamentally wrong with the stock, but with my own sale of shares, VISA (V) IS RATED A HOLD.

After an initial purchase of shares, no matter how much I 'like' a stock, I sell my shares should they decline to an (8)% loss. Since this is on 'bad news', I do not plan on replacing these shares, but instead am now back to my five position level, my minimum, and shall wait either for a sale on bad news (which I shall in this case find a replacement for), or a sale on good news to be buying a new position. 'Good news' for me is a partial sale of a holding at an appreciation target reached.

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This article has 101 comments:

  •  
    Jun 12 08:06 AM
    That was 2 minutes of my life I will never get back
    Reply | Link to Comment
  •  
    Jun 12 08:09 AM
    7 Whole dollars? Guess you just get to eat crackers for the rest of the week. Good Lord who allowed this tripe to be published? Fire them.
    Reply | Link to Comment
  •  
    Jun 12 09:18 AM
    I don't understand this. Why would you sell at a loss?
    Reply | Link to Comment
  •  
    Jun 12 09:21 AM
    I understand having an 8% loss as part of the system you stick to when trading, but nobody thinks V will stay in the 70s for long. Look for 90 by the end of June, 100 by the end of August/early September after the next earnings report and 115 by the end of the year. This stock should be a 4 bagger (4XIPO=176 by this time next year) and trading at 750 or split equivalent by 10 years. It's a long play and V is the present and future of money transaction in the whole world. Just look do some basic research and you can figure that out...who do you know that doesn't have a Visa card?
    Reply | Link to Comment
  •  
    Jun 12 09:25 AM
    Go to visaglobalwinners.blog... for those who are bullish on Visa and to join a group of prominent investors who trade as little as 100 V to many thousands.
    Reply | Link to Comment
  •  
    Jun 12 09:33 AM
    I sometimes wonder why I do some of the things I do but this guy needs mental evaluation.
    Reply | Link to Comment
  •  
    Jun 12 09:40 AM
    you are an idiot!!! wait at least 2 or more qtrs at 8% loss before selling
    Reply | Link to Comment
  •  
    Jun 12 10:22 AM
    Sometimes 8% is to soon, These are hard times for all stocks not just Visa, Sometimes a buy and hold approach still works! I think that is how to approach Visa!
    Reply | Link to Comment
  •  
    Jun 12 10:44 AM
    You held it for a whole week? Wow, what balls (I say this tongue-in-cheek)! You're the type of person that buys high and sells low and then cries to his mommy about how horrible the market is being to him!

    In case you haven't noticed, THE WHOLE MARKET IS GETTING BEATEN UP!!! Visa is not being singled out. Visa is a world leader in transaction processing for plastic money and has no exposure to the credit crisis or any of that crap. They are simply a tollbooth for purchases made with a piece of plastic bearing their logo. they collect a transaction fee from the bank issuing the card! They do not extend credit. They are a long term buy-to-hold scenario that will make it's investors very wealthy. They will be reporting exceptional earnings quater-after-quarter! Why? Because nearly everyone in the world (except 3rd world countries maybe) has either a Visa credit card or Visa debit card, and they use it! More and more, people are pulling out the plastic to pay for items. It's convenient, and quick. Watch out for a blockbuster earnings report for the quarter filed just after the Olympics!

    Sure, Visa will take it's beatings, like every stock out there. But, smart people stick and hold it. Look at MAstercard trading at 300 level, and it's not anywhere near as big as Visa. They don't even have nearly the quantity and quality of products Visa offers! No body does!

    So, to buy 70 whole shares, hold it for a week and sell is absolute stupidity! I would be embarrased to write an article for the whole world to see that touts that! You're an embarrasment to investors with a brain and a little common sense.

    Hey, why don't you go buy 1 or 2 shares of Ebay? It's at a rockbottom price now! Becareful, it may fall .10 cents and then you'll sell and go crying to your mommy again!
    Reply | Link to Comment
  •  
    Jun 12 10:50 AM
    There nothing wrong with the company, I don't see why I need to sell it. The fundamental is still strong. You just look at short term but in the long term Visa would be a good investment. People are going to use credit once the economy get better.
    Reply | Link to Comment
  •  
    Jun 12 11:06 AM
    The article writer says he was concerned about the bad news V has been getting. I'm assuming he is talking about the litigation against V by Discover card, and also the "Credit Card Fair Fee Act of 2008" in Congress. To deal with Discover V has 3 billion set aside from its IPO to pay them off. Discover is suing Visa due to anticompetive practices, which in reality the suit should be stating just how good Visa is and Discover can't keep up. Visa has a flawless business model making more money every day and forecast to earn more for years to come. Everyone likes to challenge the "Silverback" in the group and Visas dominance is just being made public now which the smartest investors are learning and jumping on-board.

    Also, the legislation going to Congress now aims to reduce the transaction fees cards process, but this will not hurt Visa. It will mostly hurt the banks who get much more of the transaction fee than Visa does. The government doesn't want to hurt the banks, so don't expect that legislation to pass, and if it did it's going to be trival to Visa who dominates the world transacting market.

    The founders and majority owners of Visa are very lucky and smart people to have come up with a company that is literally the future of money, us investors in V will only benefit, some of us greatly.

    By the way, V is the coolest stock ticker symbol ever, buy it just based on that haha
    Reply | Link to Comment
  •  
    Jun 12 11:09 AM
    Seems like you didn't research the stock before you got into it. At least you could have waited until the stock had a close to $90's swing, and sell it then. For that matter, stick to short term T-Bills and you won't crap in your pants.
    Reply | Link to Comment
  •  
    Jun 12 11:11 AM
    Why is this an article? And why did you buy Visa in the $80s to begin with?

    I bought in the $60s and I'm waiting, taking a long hold...buying a stock and then selling it two weeks later tells me you didn't do your homework, at all and are just kneejerking based on daily price fluctuations.
    Reply | Link to Comment
  •  
    Jun 12 11:14 AM
    Oh, by the way as prices of everyday life increase, more people use credit/debit instead of cash so they don't have to carry so much cash. And as oil prices go up, guess what, nobody pays with cash at the pump. And when people have less money to spend like in our current economy, they use credit to get them through. Visa cards will be transacted in good times and in bad, and the number of transactions literally goes up daily and is expected to until all of us are a lot older.

    Do you use cash? Probably not. Nobody under age 30 uses cash ever, age group 30-50 uses almost no cash especially when times are tough, and the oldies use cash to buy the outdated newspaper (sorry Dad) haha

    According to Visa in 12-18 months the majority of Visa's transactions will come from countries outside of the US. There are literally 6 billion people in the world who are just learning of a Visa card (except in Europe where it already widely used)
    Reply | Link to Comment
  •  
    Jun 12 11:20 AM
    If this person is a member of the Seeking Alpha team,as opposed to some 'Joe Schmo' who just wrote an article for them, then I am completely done listening to anything they have to say.

    They have lost every shred of credibility with me if the author's affilation is true.

    Except for maybe popping onto their website from time to time to get a good laiugh, I am fini' with these people.

    This is the goofiest way of investing that I ever heard of.
    Here is a stock that has great fundamentals,is recommended as a BUY by nearly every pro,etc. and then gets sold just because it dropped to some arbitrary % is nuts!

    They say laughter is good for the health so do you have any other stock tips that can help me laugh my way to lower BP?
    Reply | Link to Comment
  •  
    Jun 12 11:28 AM
    Stop letting your computer do all the thinking for you. If you setup your account to sell after a 8% loss then that is exactly what you get. Manage your money on common sense. You stated that you don't often write up a stock like Visa. That is quite apparent because if you had paid attention in the past two months you would have seen that Visa stock is moving along smoothly. I expect by next year this time the stock to be around 175. Also, you only bought 70 shares and your giving advise on purchasing shares.. You need to find another way to make a living.
    Reply | Link to Comment
  •  
    Jun 12 11:40 AM
    OK, I'm a stock n00b and even I know you buy low and sell high, LOL. Given V's daily volatility, what kind of moron would hold it for 2 weeks and sell it for an 8% loss?? Good god, and this guy is supposed to be giving stock advice? If anything, at 77 he should have bought MORE V. The Discover suit is whining. Visa makes the point that the government doesn't force Burger King to sell Big Macs; same thing with banks issuing competing cards; would you force a Ford dealer to sell Volkswagons? Not like there aren't plenty of choices out there. Plus as mentioned in another forum, Visa's liability is strictly limited by the "retroactive liability" scheme they put in place, as part of the IPO. In return for getting stock and being able to pump up their cash reserves by selling it, the issuing banks are all on the hook for payments due to litigation going forward. Not Visa itself.
    Reply | Link to Comment
  •  
    Jun 12 12:28 PM
    What at wuss. I have been watching Visa since it went public and I was actually mad I didn't buy it yesterday when it hit $77.

    Right now it is back up to $79. Hello! This guy apparently has no stomach for volatility and should stick to something nice and safe maybe a high yield savings account would be more his cup of tea.
    Reply | Link to Comment
  •  
    Jun 12 12:51 PM
    Taking a loss on a mistimed buy of V makes no sense. The last time to buy V was on 5/23-27 at 75-78 and you would not even have had a loss
    Reply | Link to Comment
  •  
    Jun 12 01:07 PM
    Without anything fundamentally wrong about the company, you downgrade it to a HOLD when you actually SOLD OUT?
    Reply | Link to Comment
  •  
    Jun 12 01:44 PM
    Maybe he has V puts and he's hoping his article will bring down the price a bit.
    Reply | Link to Comment
  •  
    Jun 12 01:56 PM
    Is this April 1st? Are we being Punk'd? I hope so, because if not it's the dumbest thing I've ever read on Seeking Alpha...and that's saying a lot.
    Reply | Link to Comment
  •  
    Jun 12 01:56 PM
    You recommend Buy rating According Point and Figure Chartings that made double top break out at 84. but did you know that 87 according to your charts is resistance?
    and why you rated visa as a hold , just because u are losing 8% from 70 shares holding?
    the worst thing is you close it at support 79.
    If you do short term trading , you should Cut loss when Visa hitting 88 and did 4 box reversal...
    You recommend people to buy Using PnF charts, but You don't even know how to read and act according to it
    Reply | Link to Comment
  •  
    Jun 12 02:18 PM
    The first commentor said it best - this is 2 mins I will never get back
    Reply | Link to Comment
  •  
    Jun 12 03:28 PM
    Gimme a break.
    This friggin' idiot dumps his stock after an 8% loss in a week? And what took him so long to get in, anyway? After kicking myself for not getting in on Google's and Mastercard's IPOs, I scraped up as much $$$ I could afford and got in the 1st day on Visa (175 shares at about $58). Even with this mild downturn, I'm sitting pretty and will probably buy more this week if it stays below $80 (25 shares maybe. I'm just a small investor without the last name of Kennedy or Bush). My sell point should be sometime early next year: when it hits $120 (so I've doubled my money) and it hits 1/3 of MA (Visa has something like 7 million shares, MA has 2.25 million. With a little extra as a margin because of Visa's dominance, I figure a 3:1 MA to Visa price ratio is about right and V may be overvalued if it goes above that. No hard numbers to back it up really, just my gut feeling).
    Reply | Link to Comment
  •  
    Jun 12 04:02 PM
    Hey Hoser-

    Visa will be buying back shares in either the 4Q or 1Q of 2009.
    Reply | Link to Comment
  •  
    Jun 12 04:27 PM
    Cannot believe what I just read! Next time buy 1000sh and trade on the swings daily, make yourself $500 twice or three times each day. best trader stock I've seen in a long time. Made 60K since IPO. Great stock so hold long if thats your bag, geat rich in 5 to 10 yrs.
    Reply | Link to Comment
  •  
    Jun 12 04:53 PM
    rob, i am sorry to say this. but you are not a good investor.

    see my mastercard blog at matrader.blogspot.com/

    plastic story has not stopped and no need to panic for small market movements. if you had got mastercard at 150 when everybody was so skeptical or visa at 60 when everybody hated to touch it, you could have tens of thousands.

    see the fundamentals of the company and don't sell it based on day to day stock movement.

    the plastic story is just starting in many of the world regions and mastercard (and visa) will only continue to grow.
    Reply | Link to Comment
  •  
    Jun 12 04:53 PM
    What I can't believe is that you would post this on the net for us to read and laugh at you. You must love attention. So what if V lost 8% in a week. I have seen it lose 10% and even then I was sitting on a 39% return on my intial investment. I bought V on 3/19/08 for 57.88/share. Yes the market is a rough and scary place to play right now so if you can't hang then stay off the field. The fact is Visa is great and is going to be great. The other fact is you obviously should've given me your money on 3/19/08 and let me buy V for you. It's obvious that I need to go back to school and get my finance degree so I can go to work in the industry when morons like you are getting attention for worthless blogs like this on the yahoo finance news wire lines... I'm out!
    Reply | Link to Comment
  •  
    Jun 12 04:54 PM
    This is the worst site for any financial advice... Every time I read it I'm blown away buy how big of a douche bag the writer is...
    Reply | Link to Comment
  •  
    Jun 12 05:02 PM
    Honeslty, deep from my heart, with my very short 3 years of investing experiece I felt you are

    "The JOKER of the decade".

    Don't write articles just because you want to show your photo on the internet. There are many places to slap your damn photo.

    Seeking alpha admins must ban these jokers from even accessing their website. Don't ruin your brand "Seeking Alpha"
    Reply | Link to Comment
  •  
    Jun 12 05:28 PM
    www.podomatic.com/peop...

    scroll down all the way to the bottom of the page and listen to one of the podcasts. It was hilarious. I was LMAO. You got to listen to his stock analysis after his poetic blabber.

    Bob claims himself as ametuer investor who do podcasts for ametuer investors - at the same time he claims he has 39 year of investing experiencing. He starts with like this.
    "while picking a stock he don't care about status economy, industry, blah blah ... .... "and it goes on.
    I just hooked my headset while I am doing a least priority thing in my life.

    Bob, get a life, you can spend your time in a much better way....
    PLEASE get the hell outa here. RUNAWAYYYYY........
    Reply | Link to Comment
  •  
    Jun 12 05:52 PM
    last time to buy was at 58- 63.00 sold mine at 79 because it droped from 89 and the pending law suit, is a gamble ?
    Reply | Link to Comment
  •  
    Jun 12 06:16 PM
    When u Sold at 79, I was the buyer than
    Reply | Link to Comment
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