Sell Alert: Ferrari N.V. (RACE)

By Jim Pearce • June 12, 2017

TRADE INSTRUCTIONS
Date: June 12, 2017
Name: Ferrari N.V.
Symbol: RACE
Type: Close
Limit: Sell at market

TRADE RATIONALE

After roaring out to a fast pace, RACE is getting the yellow flag today after trading below our revised stop price of $88.50 this morning so we are closing out this position and booking our 79% annualized gain. Friday’s unexpected result in the British election has put the brakes on European stocks, similar to last June’s Brexit vote. Hopefully, the market will bounce back like it did a year ago but we’re not taking any chances that it may spin out given our relatively short holding periods.

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06/15/17 ‐ 1:16pm ET June 15, 2017 at 1:16pm ET

Jim, Could you please show us with theis trade on RACE the actual formula?
I have jotted it down , but I seem to be a little fuzzy on it. Sooner or later I like to know that I ‘get it’
Thanks

Jim Pearce

06/15/17 ‐ 1:25pm ET June 15, 2017 at 1:25pm ET

I’d be happy to, but what formula are you referring to?

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06/15/17 ‐ 1:36pm ET June 15, 2017 at 1:36pm ET

Not formula in sense of a race car haha. You have given us the formula to arrive at an annualized gain, which is a concept I like. And just to be clearI am not in any way criticizing you method or result.
When I look in the mirror I know it is I who is for some reason not getting it.
Thanks again, I find if I just brush my not understanding off, I will allow myself to be incorrect, but is much better to just ‘fess up and get it right.

Jim Pearce

06/15/17 ‐ 2:08pm ET June 15, 2017 at 2:08pm ET

For a position held less than a year, the annualization formula is gross return divided by days held multiplied by 365. In the case of Ferrari, I opened the position on May 19 at $83.25 and closed it on June 12 at $88.50 (your results may differ from mine depending on when you opened and closed it, and at what prices you opened and closed it). That means I earned a gross return of 6.31% over 25 days, which equates to 91.98% over 365 days (note: this is not a compounded figure, but a simple annualization). For this alert, I calculated the return from my limit price which worked out to a 79% annualized return since that price was higher than what it was the day I issued the buy alert.

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