I bought Charles Schwab back in 2006 because the company was struggling with the current CEO David Pottruck in place. Mr. Schwab himself stepped back into the role of CEO and re-established the company to be the finest and most trusted stock brokerage names around. He is again stepping down as CEO and therefore his value to the company will leave with him. I believe the stock price has achieved its intrinsic value of around 23 to 25 per share and with added competition from cheaper brokerages, it remains to be seen if Charles Schwab's new CEO Walter Bettinger will be triumphant in this new era of online trading.
Archer Daniels Midland is a classic example of holding on to a trend for a little bit too long. I was riding the wave of ethanol production from corn and this stock was up roughly 40% for me at one time. However, this company has taken some losses not only in demand for its products but also from pure speculation of alternative fuel developments. I continued to hold and eventually lost my gains and even began losing on this stock after 2 years of holding. It would have been better to have cashed out while ahead and applied the cash to other investment opportunities.
My July Stock portfolio had about 16% cash but my August Stock portfolio had only around 3% cash. My dad always taught me to hold about 10% to 15% cash for emergency reasons so the sale of these 2 stocks now place my cash holdings into that range. I'm fine holding the cash since my brokerage sweeps my cash into a money market fund that returns roughly 5% so doing nothing may be a safe play for now as we wait for the $700 billion bailout to pass.
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