So, this week I made the decision to sell off almost all of my Macy’s shares. This is the 2nd time I’ve sold Macy’s; I sold it once before when I was down 11% in it. This time I was down a whopping 30%. Fortunately, it was a minuscule part of my portfolio. This resulted in a loss of about $230 on the trade. I quickly took the money from the trade and put it into another company with better fundamentals.

Why did I sell Macy’s?

First and foremost, I believe the fundamentals changed for Macy’s. This is the second earnings report where the news wasn’t good. The Q1 earnings report was decent and the stock didn’t do anything except go down after that. This Q2 report was a big miss and it dropped 15% in one day.

Sometimes you need to cut your losses

Currently, I stand by my decision. It has continued to make new 52 week lows every day since I sold it. There’s no upward momentum here. In addition, Wall Street is not fond of the retail sector at the moment.

I thought it paid a nice dividend?

Yes, it did and now it pays an even better one. The yield is currently 9.36%, which is insane. However, I don’t invest for high yield or dividends alone. I don’t want an entire loss of capital chasing a dividend. What good is a 9% dividend if you’ve lost 50% of your stock? Even on paper. Remember if a stock goes down 40%, it takes more than 40% to break even. In the last month alone Macy’s has went down over 20%.

Most importantly, I fear if the stock keeps dropping there’s a chance they’ll have to reduce the dividend.

Waiting Game

I was no longer prepared to play the waiting game while Macy’s did nothing to my portfolio except decrease the value of it. I believe I made the right decision; however, only time will tell. If I made a mistake, I’ll be sure to note that on here in months to come. Currently, it looks like I definitely made the right choice selling half of it when it fell by 11%. I have other companies down 20% that I didn’t sell, so it’s not only a matter of negative total return; it’s a matter of company fundamentals.

I am not sure where I went wrong in the process. I felt like Macy’s could make a come back, that the new CEO would represent a good future for the company. It seems that is not the case, unless major improvements are made. I’m not sticking around to find out.