Verizon: Whence the optimism?

by Gilbert Keith

I have been long on Verizon for quite a while now. I apparently bought 6310 shares at 33.40. I sold about half of it at some point (at a loss) to make some money for whatever other positions I wanted to get into.

My long position has mostly been because  I bought into the “iPhone is coming to Verizon” bandwagon. I know it’s a silly proposition, but what am I to do? For a long long time, the stock only moved sideways. Actually, it was in the negative for a while (down to ~27 by the end of July,) though dividends were enough to make up for losses in share price. Since July, though, the stock has rallied to about 37 today. That’s around 40%, which is a lot of upward movement.

I am not quite sure what is causing this optimism. For one thing, the whole iPhone coming to Verizon rumor has still not been substantiated. There have been some “indications” supporting the rumor, but I think sane people will continue to be unpersuaded by the chatter.

What should I do? Short Verizon?

Maybe the optimism is all about good sales during the holidays. I hope that’s true. Any actual news of the iPhone coming to Verizon would be even more awesome. Atleast it’ll justfiy that investing on whim is okay once in a while (especially given that Verizon happens to be a decent dividend play.)

NOTE: We are all talking about fake money, but my actions here approximate the actions I would have taken if I were playing with real money.

UPDATE:

From Jeff Ely’s blog Cheep Talk:

…there is social value from coordinating our focus on arbitrary milestone days.  If someone presents statistics to you about the behavior of some variable over the course of a year, which would be more meaningful?

  1. Stocks rose x% from July 9 2010 to July 9 2011.
  2. Stocks rose x% from Jan 1 2010 to Jan 1 2011.

Subjectively, it is more likely that the dates for the first range were cherrypicked by the statistician to generate the conclusion.  Restricting attention to dates that have significance “outside the model” makes the exhibit more credible.

It’s kind of funny that I “cherry picked the data for the post, mostly because it’s impossible to embed good charts without going crazy. Oh well.

The blog also has a post about the January Effect. It’s aptly titled “Buy Stocks Now.”

 

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