March 15, 2021

Today I sold Nordstrom for $46. I bought the stock for the first time all the way back in August 2019 in the before times, as Kai Ryssdal puts it. It was the first stock I bought while on vacation. I have fond memories of buying it from a hotel room in Florence. It’s still the last vacation we have been on.

I bought Nordstrom because it is one of the best-run department stores. Even though malls, in general, were doing poorly the high-end malls where all of Nordstrom’s stores were located were doing pretty well. I originally bought the stock at $29.50 and the estimated fair value at the time was about $55. But then the pandemic happened and the stock took a dive like every other one.

About a year later, in August 2020, I sold half of it for tax purposes at $15.80. One of the things that I learned in my second year of active investing was that I could sell a stock and record it as a loss for tax purposes. Then I could turn around and buy the stock again as long as I waited 31 days. I usually give myself 5–7 business days more to be absolutely sure.

I bought back twice the amount of the stock in October for $13.25 and see the stock skyrocket immediately after. Although by now the fair value estimated by the analysts was closer to $35. I decided to split the difference and sell it at $45. It rallied more than 25% in the last 2 days and forced me to sell.

If the final rally had happened a little slower, I might have had the time to reevaluate my selling price. But because of the rapidity, I could not come up with a rationale to stick with it.

Learnings:

1. You can sell a stock at a loss, use it to offset your gains in a calendar year but then buy the same stock again as long as you do it 31 days later.

2. Decide your selling price as soon as logically possible, continue to reevaluate the price with the information you have but sell it when it hits the price you decided on. There is no point in coming up with rules for a system if you don’t stick to it.