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There's a lot of retrospective pieces being written at the
end of year/century. Thought I'd add the following "what
if I'd held" study to the list. I don't know if there's
anyone out there who bought Yahoo at the IPO opening (in
1996) and held until now, but if they did, they've done
very, very well. Split-adjusted, YHOO opened at $4.21 (on
4/12/1996), and today it closed at $319.625, That's about
a 76 fold increase in about 3.5 years, which boggles the
mind.
Well, out of curiosity, I looked at what sort of drawdowns
the buy/hold YHOO stock holder had to endure to have held
it until now. Here's a table that illustrates the type of
swings that YHOO has gyrated through over the past few
years:
Date Long Short
days %-gain days %-drop
960415 1 46.94 2 31.25
960502 11 34.34 48 53.38
960923 51 58.87 43 29.95
970127 44 116.67 35 41.14
970409 15 63.63 9 31.25
971006 116 255.30 16 41.79
980707 171 508.06 40 43.13
980929 19 128.18 7 27.58
990111 64 356.41 7 43.96
990127 4 52.86 15 34.94
990406 32 96.77 10 36.48
990427 5 27.46 21 39.01
990607 7 30.91 6 25.44
990706 14 60.89 22 41.88
990805 87 221.00
The 171 day rally ending on 07/07/1998 gained 500% on its
own. The worst drawdown was early on, beginning on
05/02/1996, lasting 48 days and dropping 54% from high to
low. All other drawdowns were less than 45% from the high swing
to low. The latest up-leg has shown an increase of +221%
in the past 87 trading days, beginning on 08/05/1999, with
less than a 25% drawdown.
Conclusion: holding from YHOO's open a 55% trailing stop
would have kept you in the game. Holding from 5 months
after the IPO, a 45% trailing stop would have done the job.
Given the gain, it would have been worth it, but it is
easy to see how a lot of investors were shaken out over
the course of the past few years.
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