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The next day the stock went down about a point. No big deal. The following day it dropped another 4 3/4. These were the "smart money" early birds not taking any chances on the upcoming earnings report. I should have been one of them:$2000 of my profit gone in one day. But it was what happened the next day that threw me for a loop. |
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A favorite little broker cliché about getting greedy goes like this: "Bulls make money and bears make money but pigs get slaughtered." |
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The earnings report for Pfizer came out the next morning. Everyone was expecting a good quarter based on the previous quarter's Viagra profits. Many investors were wishfully thinking that the drug would take off beyond its intended clinical use and become a recreational drug for all men to improve sexual endurance. It was an elegant if overly simplistic notion: As the number of men benefiting from Viagra went up, so would the value of the stock. At the least, they were expecting an improvement in earnings over the previous quarter. |
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No such luck. The earnings came in less than the previous quarter, sending institutional and individual investors rushing for the exit gate. The stock was, as they say, taken out to the woodshed and thrashed mercilessly, sliding 14 1/2 points. It was the single largest one-day drop in Pfizer's history. The following day, Friday, it dropped another three points. By this time, my profit was oozing out of every pore. |
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At no point during this miserable free fall did I sell, thinking the stock would recover after the earnings disappointment wore off. Here I am, still kneeling with my ear to the ground, listening for the coming Indians, while their arrows are already being zinged fiercely into my back! |
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Because the stock had been on such a steady upward climb for months, I couldn't (wouldn't) change my thinking fast enough to accommodate what was happening. |
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Monday of the following week brought more emotional uproar. After soaring 250 points at one point, the Dow finished down 56 points. Not to be outdone, the NASDAQ had its second worst day ever, closing down 138. To add insult to injury, Pfizer finished off its punishing meltdown by dropping another nine points to put me back where I started. |
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