Often waiting is more profitable
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Help me work through some mental math,. I’m thinking about my MicroStrategy stock which is worth $100,000 comma when I purchased it at $260 a share period. If the value then increases by $15,000 comma, so the total is then $115,000 comma, and then I sell $15,000 of the stock comma versus simply waiting for the stock to double in price comma, is there a difference in how much yield I get?
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Let’s break this down step by step to see the impact of selling $15,000 worth of stock versus waiting for the stock to double.
Step 1: Initial Investment
• You bought MicroStrategy (MSTR) at $260 per share.
• Your total investment is $100,000.
• The number of shares you own:
\frac{100,000}{260} = 384.62 \text{ shares}
Step 2: Value Increase by $15,000
• Your total stock value increases to $115,000.
• New price per share:
\frac{115,000}{384.62} = 299.99 \approx 300 \text{ per share}
Step 3: Selling $15,000 Worth of Stock
• Shares to sell at $300 per share:
\frac{15,000}{300} = 50 \text{ shares}
• Shares remaining:
384.62 – 50 = 334.62 \text{ shares}
• Cash on hand: $15,000.
• Remaining stock value:
334.62 \times 300 = 100,386
Step 4: Stock Doubles in Price (No Sale)
• If the stock doubles, the price per share goes to:
260 \times 2 = 520 \text{ per share}
• Total value if you didn’t sell:
384.62 \times 520 = 200,000
Step 5: Stock Doubles in Price (After Selling $15,000)
• Remaining shares (334.62) at $520 per share:
334.62 \times 520 = 173,999
• Adding back the $15,000 cash from the sale:
173,999 + 15,000 = 188,999
Comparison of Outcomes
1. No sale, wait for doubling → $200,000
2. Sell $15,000, then wait for doubling → $188,999
Conclusion: The Cost of Selling
By selling $15,000 worth of stock early, you end up with $11,001 less when the stock doubles ($188,999 vs. $200,000).
This happens because:
• The shares you sold would have doubled in value to $26,000, but instead, you locked in just $15,000 in cash.
• You reduced your exposure to the doubling event.
Final Thought
If you believe the stock will double, not selling maximizes your return. However, if you need liquidity or want to de-risk, then selling $15,000 provides cash now but reduces your future yield.