Do look gift horse in the mouth

Last night as we drove through the beautiful hills west of Salem, news came over the radio that caused us to scream with joy, clap our hands and generally carry on like a madwoman.

“Why does good news like this seem to come on when we’re in the car,” we wondered, recalling a similar event that had occurred many years ago in Eugene, Oregon as we drove to the annual convention of the state credit union association.

We were at the very beginning of gaining investing experience, having just saved up enough money to venture into the stock market. Our first purchase was part of our “buy what you know” philosophy: Intuit (INTU), the financial software company. The news was that Microsoft was going to buy the company.

The stock’s price jumped 40% that day. When we heard that, we screamed and shrieked and pounded on the steering wheel, thankful that the windows were all rolled up.

That was a Friday. As we came to our senses over the weekend, we had a couple of thoughts.

1. Do look a gift horse in the mouth.

2. The big price jump was probably overkill and wouldn’t last.

3. Usually when a big tech company buys a little company, it kills the little company, its employees and its products. Not literally, of course, but we had seen this happen with several other companies and very good products. That’s not a good thing.

We sold our Intuit first thing Monday morning, locking in the gain that a giddy market had placed on our company. The stock gained and lost 40% of its value in a few short weeks. Thank goodness the deal fell through shortly after it was announced.  We love our Quicken and TurboTax software.

Now, if we had held on through many years of heart-stopping price leaps and plunges, we would be sitting in the catbird’s seat right now, but never have gotten a penny of dividends. We know that really smart market-timers probably made big profits going in and out at the right time, but we prefer a more conservative approach that allows us to sleep at night.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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