Some of you know that I’m a very happy ETrade customer and some know that I have bought ETrade’s stock (ETFC) during the last month. Here’s my buying history and the extended hour price after it reported a net loss of $56 million.
09/06/2007 @ $15.1675
09/25/2007 @ $12.1999
10/12/2007 @ $13.30
After hour price on 10/17: $11.75
After adjusting for different quantities bought at different times, I’m down 12% as of this point. Who knows what tomorrow will bring for the stock price but no matter how you look at it, this has been a bad investment for me so far. I can do three things at this point: buy more shares, sell my shares, or do nothing.
1) Buy more ETFC – The stock is beaten down so bad that it cannot go much further because most people already expected the company to report a pretty bad quarter. The fact that it is only down 5.85% in after hours trading after such a bad quarter confirms that most people who will sell the stock has already sold (the stock was in the high 20s a few months ago). The risk is of course that the mortgage unit keeps getting worst and worst to a point that the company is in trouble and/or their retail clients start moving assets away from ETrade.
2) Sell ETFC – I am already down 12% and being stubborn usually equals more losses. What you don’t know never hurt the most but what you know that turns out to be wrong is usually the most devastating.
3) Do Nothing – and hope that the stock price goes back up. This option is really for the undecided, not a good idea.
Before I tell you what I plan to do, maybe I should tell you why I bought ETrade in the first place. I see a great company that’s been so badly beaten down because of the mortgage unit. I see so many good things with one bad thing. In time, things will turn around because I believe the valuation of this company is very good. If the stock price keeps going down, it will be very attractive to other competitors to trying to gobble it up, putting a floor in the stock price.
Has this picture changed since the earnings call? No, since I was expecting the bad quarter. I see the same great company that just got cheaper. It might take a while for the stock price to come back up, but I know it will.
So what have I decided? Well, can’t you figure that out already? 
PS: Buying ETrade or any other company that everyone thinks is in trouble is a dangerous thing to do, so only buy them with money you can lose. There is a chance that I’m just dead wrong. If I lose it all, I may scream, I will probably swear and I could even cry. One thing I know for sure though, I know I can afford it.
- E*Trade Financial – Official Site
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Love Etrade……..no respect.
This is pretty cool…. check out http://www.supportetrade.com on the web. Looks like the common man is finally getting pissed enough to fight back.
This post and many of the comments are a great example of putting way too much faith in dollar cost averaging. The right move months ago and the right move today is abandon ship. Also, it is important to remember to not get attached to any particular investment. Since, you are down so much in ETFC, you want to hold out until it goes up. In reality, there are way better investments out there. Sure ETFC may go up… eventually, but get your money into something that works. Bottom line is there is more pain in financials coming and Etrade is a part of that sector.
Sell your stock for heaven’s sake.
Congratulations ! How are you able to do that?
Too bad for you. Hope you recovered from that soon.
question: apparently i have shares or stocks with EA which etrade want to manage. would anyone be able to assist me in finding them, have contacted ea and etrade, to no avail. i worked for an aussie company about 20 years ago, ea bought them out. never knew i had shares until etrade sent a letter to me 19 years after. luckily my parents live at the same address. etrade want to manage my shares or stocks but i dont even know as to what i have to manage. obviously there will be an adequate reward if anyone can help me in my search. cheers, bones
Any news about your E*TRADE stock? Have you sold or held? I came across your blog a while ago when I was researching this stock!
Jane: I still have some of it and you can see how it’s doing
If you are looking for the future, it all depends on your time horizon + whether you believe the company will survive because it will inch back up eventually (assuming your time horizon is long) if the company doesn’t go into bankruptcy.
To answer that question, you need to look into the mortgage back securities that it owns and figure it out. Also, I suggest listening to the conference calls because investing in a company like this is riskier than a company like Mcdonalds for example.
E*Trade is a the worst financial institution on the market. I have had a horrible experience with them. I opened an etrade account and during my account opening process, my account was being hacked into. My identity was stolen. E*Trade confirmed that a perpetrator from a Canadian IP address took my information, logged in, and changed the password. I have sought restitution from E*Trade from all the assets I’ve lost and simply denied my claims without proper investigation. Why would anyone want to do business with them!
Keep on averaging down and you wont be talking about affording any trades because that hobby will be done. The sad thing is the stress so many people will go through and the capital they will risk and tie up to get back to 0 (they hope). I personally blame Kramer for always touting this strategy. I know this thread is old, but since March 2009, Etrade cleared $2 once and that was to about $2.10. I guess I just want people to ALWAYS cut losses quick. If you want to really own that stock then sell and let it find a bottom fist and then confirm that bottom by observing multiple tests of it with strong volume at that level. Averaging down makes no sense ever, and pride wont buy a share of anything. Also dont fall in love with these companies especially ones in financial services. I dont think I know anyone who knows anyone that can tell me a decent way to value them. Sorry about the rant…. All of my friends always talk about averaging down…. but for some reason, always doubling down after a loss in casinos scare them… Go figure…
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