Media General Stock is on a tear. Since it’s 2008 low of less than $1.50 per share, it like many stocks has taken an unthinkable ride. I would argue that an investor who owned Media General as a large part of their portfolio pre crisis or someone who bought it post crisis experienced an investor’s version of riding in a fighter jet.
The pattern of individual stocks to swinging investors from millionaires to half a millionaires in a matter of months is not uncommon. Unfortunately people’s expectations about the performance of stocks is often unrealistic. Common questions such as:
- Should I buy stock?
- Should I sell my stock?
- Where should I invest?
- Stock Questions Stock Questions Stock Questions!
Should I Buy Stock in Media General? Should I sell my Stock? Give me some good stock advice for Media General shareholders!
My advice is
to ask Kenny Rogers (http://www.youtube.com/watch?v=Jj4nJ1YEAp4&feature=kp).
What a great song….but these are stock questions not questions about card games…so here is my two pennies…many different and more questions should be asked before you decide to buy or sell any stock let alone Media General. Listed below are a few questions to help you get closer to that decision.
What percent of your portfolio is invested in MEG?
Does MEG represent a large portion of your total liquid investments? We know how good it would feel if MEG went to 200/share but if it went back to 9, 5, or 1/share would it significantly change your retirement dreams ( FYI… MEG was trading at less than 1.50/share in 2008)? If your retirement dreams would change then consider peeling back on your Media General holdings or hire a pro to implement a hedge (contact us if you have questions).
What are your goals?
Most people will say: To make money- a lot of money… this is the obvious.
This sounds simple, but it’s rarely done. Invest with a plan, if you are not a full time investor seek guidance from a real pro (that doesn’t always mean a financial advisor see Financial Advisor Questions worth Millions). If you could care less about growth don’t invest in stocks. If you want to have your cake and eat it to snap out of, step back, and quit thinking like poor people it’s not realistic.
Why did you buy MEG and why would you keep it?
- Did you buy Media General because you believe in their business model?
- Do they have a competitive advantage in their industry?
- Is their industry a thing of the past or is it an up and coming game changing industry?
- Are they adapting with the technology that constantly changes?
Good Stock Advice–
Act like a professor and do a bit of research on the stock before you decide based on a hunch!
I know nothing about Media General, but in just a few minutes I’ve gathered the following information and questions.
According to a July 2013 gallop poll, 4% of people are using Local TV to get their news http://www.gallup.com/poll/163412/americans-main-source-news.aspx.
How long will this trend continue and will Local TV increase its market share? As baby boomers begin to realize their retirement dreams I would guess there will be a lot more local news watched in the traditional sense however, I would be on guard for a change in the way news is delivered. If people tire of traditional T.V. and new technology/news sources such as http://www.reddit.com/ evolve, local news companies like Media General may find themselves in big trouble….unless of course they adapt to the medium by which local news is delivered in the future.
If living on interest from your existing investments sounds like your retirement dreams and you hold more than 10% of one stock (in this case Media General Stock) I would advise you to sell some. Media General doesn’t pay a dividend and would not be considered an income train or a safe place for a large percentage of someone’s assets in general let alone in retirement (unless you are really good at hedging!).
If you are already retired and Media General represents more than 10% of your liquid investments I would CONSIDER:
- Selling some of the stock or
- Finding a pro to implement a hedging program to reduce your risk.
If MEG represents less than 10% of your holdings even a drop to zero only represents a 10% loss to your portfolio so the impact of that stock alone shouldn’t be earth shattering.
Good Stock Advice:
Be a realistic (That’s Italian not a typo).
The reality is that MEG could trade at 0 or 1,000+? Most people will focus on how much they COULD MAKE but neglect the thought about about how much they COULD LOSE…until it becomes a reality. Let’s assume you own MEG today and it represents 15+% of your assets. Something awful happens and suddenly MEG is trading close to 0… how would that taste in your mouth? If you can walk in those shoes for a minute you will know if you should sell your stock, buy more stock, or look for other stock or trading ideas.
Restricted Stock Options?
If you are an employee or former employee at Media General holding restricted stock/stock options you have to ask all of the questions above and more.
Once you have your answers if the answer is to lock in some profits it will take more than just selling the stock to meet your objective. Using proprietary strategies combining various option contracts with the restricted stock, professional hedgers can likely lock in value for you and help you sleep at night knowing the lying share of your investment is safe.
Hedging can be done by just about anyone by purchasing put options as insurance on the underlying security. Don’t run out today and buy a put because this can become very expensive if the stock doesn’t drop during the first few put expirations which could cause some ugly valuations in your account.
It is highly advisable to use a pro that understands various strategies that are likely more efficient than just buying puts. Submit your information below and we will be happy to get you in touch with a qualified hedging team.
What about Earnings per share? Revenues? Future Revenue estimates? No need to dig into that in this article, you can get all of that information on various other websites:
Much like any stock on a run, Media General could continue on its happy journey as it has since 2009 or it could completely let investors down like it did the early part of 2008. More important is that you have a plan for your holdings.
- Could MEG change your retirement dreams in a bad way? If poor performance of 1 stock could crush your retirement consider using logic and having less exposure to that stock. If you need to lighten your exposure you can do this by selling ( assuming you don’t have restrictions) or by implementing a Hedging Program.
- Do you think we are nearing another equity market bubble? If so MEG could be throttled by forces out of their control. If this concerns you but you still think MEG is a winner you may want to peel off some profits and then dollar cost average back into your position after a healthy correction instead of laying it all on the line after a 200% move in the S&P 500 since March 2009 (keeping in mind the appropriate total exposure once you’re averaged into a comfortable level).
If you haven’t already considered these questions/ideas then I trust you will begin thinking about investing more like a business instead of playing the lottery. Many times the right or wrong answer about a stock you own or are considering lay in your master plan rather than in what you think the stock will do in the next month, year, or five years. Plan for the worst and hope for the best…most important of all though… is to PLAN! If you would like more information about hedging your MEG holdings or if you would like a full review of your portfolio you can reach us a few ways:
- Email: Info@investmentprofessor.com
- Phone: 980.233.9770
- Add a comment below
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