Wells Fargo Is Over Valued at $25.70

Tags: Stock Trading Diary, Stock Trading Lesson Learned

Well that is what Wells Fargo Logo I feel and that is why I end up with a short position on Wells Fargo at the end of today’s trading. Well Fargo is the stock that I love and hate. I love it because I personally bank with Well Fargo for more than 10 years and I believe it is indeed providing high quality of services to customer. Wells Fargo acquired Wachovia and Warren Buffet recommended Wells Fargo more than one times in public as the best bank worth to invest. I recalled that was when its price was at around $8 and $20.

Trade Account Balance 5/14/2009I hate it because it is the very single stock that caused me to lose over $9,000 in a single day and wiped out my three months of hard work. Yes just last Friday before I started this blog I took 3000 share of short position at $24.76. It was the day after Wells Fargo announced offering new shares at about $22. My reason behind this was new share sold at $22 and lower there was no way that it could be trading at 10% higher than the offering price given that Wells Fargo was traded lower than $22 just a few days before the offering. I was right in the early morning on 5/8. It ever went down to $24.45 but after that it went straight up to $28. I was nervous because I was highly leveraged when shorting these many shares. After keeping it over the weekend I covered the short position on early Monday 5/11 losing more than $9,000. Looking back if I were to keep it a couple days longer and cover it yesterday at close I could have made handsome profit.

The lesson I learned from this is that I have to have discipline in trading. I shouldn’t have put all my leveraged bet in a single shot even a good entry price is identified. If I were to short 500 shares instead of 3000 shares I wouldn’t have problem to keep it for a week.

Anyhow passed is passed. One of the purposes that I setting up this blog is to remind myself that the public is watching me and I can not behave like crazy gambler. I have to have discipline and I have to be persistent with it.

I made some trades on USB today and my account balance is up. Again I am going to keep my short position on WFC over night to see what happen. See you tomorrow!

Account Balance Change: +333.77