It's june 21th 2017 and I'm saying to myself:
"Hey, I have a few thousand dollars left and I'm watching a few stocks that aren't that expensive at the moment. O'Reilly isn't that expensive (about 20 times current earnings but about 17 times next year's earnings) on an historical basis. Plus, a lot of analysts have said lately that we shouldn't time the market. Even if the market is pricey, there's always some occasions and we should always be invested."
I've never believed that much in that last sentence but when you hear something many times, it becomes the truth. Just like in the 40's with those great old nazis speeches.
So, I bought some shares of O'Reilly at a price of about 219 US$.
And then, two weeks later (today), the stock lost about 20% of it's price on a single day. What the fuck?
Why the fuck have I bought my shares this close to such a drop? I hate myself. I deserve a punishment. I deserve death.
Well, I don't want to pretend to be a fucking prophet, but, I thought that there were some chances that that kind of shit would happen.
Because something similar happened last year with Novo Nordisk. It's a very different stock (healthcare) but it shares a lot of similarities with ORLY: a very high ROE, a relatively high historical PE, a low beta, very steady earnings, great management, large cap, etc.
I said to myself that this kind of stock is hard to buy at a discount. But as with Novo Nordisk, I knew that the growth had been slowing for the last quarters. And the price of the shares was lower and lower each week while the market was pricey.
That's a great indicator: when the S&P/TSX is high and a stock is relatively low, you should probably (not always, buf often) wait before buying. If the price is lower and lower, month after month, it's because the market feels something. And a hit is probably incoming.
I'll keep my ORLY shares because it's a great company. But I think that 2017 won't be a good year for the stock. Usually, such a drop isn't mitigated before a while.
Do you sometimes hate yourself like I'm hating myself right now?