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Unlucky becomes Lucky !

“but I will tell you that I was just plain Lucky on this one.”

GEO Prison in South Africa A GEO Operated Correction Facility in South Africa

This is a personal experience I had with the GEO Group stock and how I went from one sad hombre to one very happy hombre !

It was the morning of August 18th , 2016 if memory serves me correctly. I had been looking for another stock to add to my portfolio. As a Dividend Income Investor of course I was looking for a higher yielding stock but I was also looking for an area that was unique to my portfolio and was a solid company. After researching The GEO Group (GEO) I liked what I saw. First what they are about, here is a quote from their website in the companies own words:

GEO provides complementary, turnkey solutions for numerous government partners worldwide across a spectrum of diversified correctional and community reentry services. From the development of state-of-the-art facilities and the provision of management services and evidence-based rehabilitation to the post-release reintegration and supervision of individuals in the community, GEO offers fully diversified, cost-effective services that deliver enhanced quality and improved outcomes

The GEO Group operates 143 correctional and detention facilities world wide. In the U.S. they have 74 facilities that contains over 80,000 beds with over 100,000 beds world wide. In the U.S. the have contracts with 3 Federal clients and with 10 states and several localities ( cities and counties) Internationally they operate 7 correction facilities  located in Great Britain, South Africa and Australia.

In addition they operate 50 Residential Reentry Facilities, 61 Day Reporting Centers (DRC) and 12 Residential Youth Facilities.

For financial information I suggest visiting their Investors Website.

So getting back to my personal story I thought everything looked great. It was certainly no Johnson & Johnson (JNJ) but with a yield that exceeded  8% at the time it looked fantastic for me. I didn’t know at the time but a lot of people think it is wrong for governments to have private prison and correctional facilities. I’m not sure it would have influenced my decision though because I am agnostic on the subject.

I waited for the market to open and it looked like a calm market day so I submitted my order to buy 185 shares at $32.31 per share. Just under $6000 worth of stock. I guess about an hour later I took off for my lunch break. I was hungry and it appeared to be a non eventful market day. I had  a great lunch, (sorry for those wanting to know, I do not recall what I had! ) and the day seemed good.

I have to share that it is not unusual for a stock I purchase to decline for a day or two or even for a week or two after I purchase it. I have learned to expect that about 99% of the time I purchase a stock it will decline in value for a period of time. That is what I believe is my own personal luck. But never has something like what was about to unfold ever happened to me before.  It was when I returned from lunch that all Hell broke loose! I looked at my computer screen and I could not believe my eyes. Everything looked fine except for the stock I had just purchased that morning – The GEO group! While I don’t recall the exact price that morning the stock I had just purchased now had a total value of about $2,500 dollars. Less than half of what I had paid for it just a couple of hours earlier. What in the heck had happened? I quickly went into full blown panic mode. Should I sell what was remaining ? What had happened? I didn’t know. I immediately started searching the internet and the financial sites to try and figure out what had happened and try and piece together a strategy before I lost every penny of the stock.

Finally I discovered it. The Obama administration had announced its intentions to no longer contract private prisons. Okay, now I had a reason but I still did not know what to do. Sell the stock, buy more stock (it ended up at over a 12% yield) or just do nothing and sit on the stock I had. I spent well into the next day trying to figure out what to do and reading every article or comment I could find to try and gain guidance from others. Unfortunately most of the investors seemed to be strangely quite on the stock. Usually these folks are out boasting that they know everything in the universe and the rest of us are lucky to be on the same planet with them, but this time …… Crickets!

I have to say the greedy part of me was saying, “Double down, buy more stock, the yield is over 12%!” But the more reserved and sensible side of me was saying just stay the course. Don’t risk any more money but have faith that this stock would recover. So that’s exactly what I did, nothing.

The stock did recover somewhat but it wasn’t until President Trump won the election that the stock skyrocketed, not only to recover to the price I had purchased it at but over ten dollars a share higher. Recently the GEO stock split in a 3:2 split. Now as of today, 2 May 2017 I have 277 Shares of the GEO stock , its share price is $33.00 per share and the total value of the stock is $9,141 ( Not counting dividends received).

Now I am sure that some out there will try and convince you of their genius ( and just maybe they are) but I will tell you that I was just plain Lucky on this one. The only thing I will take credit for is taking a somewhat calm approach once the initial panic and shock wore off and going with my gut instincts. There is a part of me though that still thinks I should have been greedy when the others were panicking, but when things happen that fast it is very, very hard not to follow the herd and stampede with them. For those they did buy the stock when it was yielding over 12% – congratulations. I hope you also had the foresight to hold on to it through the split and are now reaping those rewards also.

Investing is easy, except when it isn’t. If I had panicked and sold I would have lost almost $3,500 instead I made almost $3,500. What is the lesson here? I think the lesson is that you have to remain calm, and think things out rationally. Making panicked decisions will cost you money and make you a poor investor. Each time something like this happens it should be a learning experience for you. None us knows everything and if you think you do, someday it will cost you.

 

What about you ? Any similar experiences to share? We would love it if you shared them with us. Please also consider following us as we have a lot more where this came from !

 

 

 

 

 

 

 

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