Determining the exact price to buy or sell is never easy. That's why some investors (myself included) would rather be generally right than specifically wrong.
I don't get rewarded for making bearish forecasts, even when they prove to be correct. In fact, I hate it when I'm correct about a stock being overvalued because I know people are losing money.
Telstra Corporation Ltd (ASX: TLS) is a perfect example of a stock which I have been bearish on for some time. Not because it's a terrible company. It's a fantastic company and will likely make a great investment over the ultra-long term.
However it was, and still is, expensive.
That could be one reason why its stock price has fallen nearly 6% since going ex-dividend, less than a month ago.
If you bought in, expecting your savings account to be credited a juicy 2.6% dividend – with franking credits held under your name at the ATO, then you'd be bitterly disappointed with your investment.
Why?
You see, the falling stock price has wiped out any apparent benefit of its final 15 cent dividend payment.
Now, I could become another member of the community of financial commentators who can, with the almighty power of hindsight, say shares will keep falling as U.S. interest rates rise or the Australian dollar falls face first.
But I'm not prepared to make those generalisations, nor am I prepared to say Telstra's share price will fall X-amount of cents by Christmas.
Instead, Telstra's short-term woes should remind us that no stock is a buy at any price.
Buy, Hold, or Sell?
Telstra's share price could fall further than it already has. It could be U.S. interest rates, RBA comments or a depreciating AUD – I really have no idea why it might, or might not, drop in value. So instead I'll focus on sticking to what I'm good at, which is identifying great companies trading at discounts to my fair value estimate.