Fed Ex corporation released guidance yesterday on where their business and financials were headed. Fortunately, for people like me, an opportunistic predator of the stock market; this was excellent news.
FedEx has a wide moat so it passes my first test. It also has very large market cap; there goes test 2. Then it was time for some due diligence. I started studying the history of Fedex and their associated financials. What I found was a solid company with some hiccups. The stock dipped so low that I bought as many shares as I could.
The market is driven by people; and for better or for worse, humans are emotional. The news prompted many shareholders to sell off their shares as the stock continued to dip to as low as $171/share. Because I am an opportunistic buyer and because Fedex pays a fancy dividend; I could not help buying up shares.
But then, fortune struck. There are many things you can never predict; and I never could have seen this news coming. Barron’s put out an article speculating that FedEx had dropped so low that Amazon might (and should) attempt a takeover. So what do you think happened next? That’s right; FedEx shot right back up.
Many people would sell at this point, but that is just not my style. I now have shares in a very good company that I bought at a bargain price. The dividends on this transaction will be evident for many years ahead as the Yield on Cost will only grow over time.
The message here is that you can not predict anything in the market; you can only react very quickly to the information that you have (and that has been made public). The next post will be on dollar cost averaging since that is essentially what I did; had I I already been a FedEx shareholder. More on that on Friday!