Magic

Investing can be a game of strategy and patience, but with the right tools, it can also feel like magic. A case in point? My experience trading Welltower Inc. (WELL) stock, where a simple trailing stop order helped me recover my initial capital and left me with free shares to hold for the long term. Here’s how it all unfolded and why this strategy might just become your new favorite trading move.

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The Initial Investment: Betting on Aging Demographics

Back in 2016, I purchased 20 shares of Welltower Inc. (then HCN) at $76.67 per share. Welltower is a real estate investment trust (REIT) specializing in healthcare infrastructure—think senior housing, outpatient facilities, and long-term care centers. The aging population and rising demand for healthcare services made it a compelling investment.

At the time, I was convinced of the long-term potential of the company. My blog post on the day of the trade summed it up well: “There will be more and more rich old men and women needing assistance.” That thesis hasn’t changed.

Purchase Details:

• Stock: Welltower Inc. (WELL)
• Trade Date: August 19, 2016
• Quantity: 20 shares
• Price: $76.67 per share
• Total Cost Basis: $1,533.40

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The 10% Trailing Stop Order: Locking in Gains

Fast forward to July 2024, and Welltower’s stock price had surged by over 41%, trading around $126. At this point, I decided to protect my gains while keeping the door open for further upside. That’s where the trailing stop order came into play.

A trailing stop order automatically adjusts the sell price of your stock as it rises, trailing the market price by a specified percentage or dollar amount. If the stock price falls by that percentage, the order is triggered, and the shares are sold.

Here’s the order I placed:

• Type: 10% Trailing Stop Order
• Trigger Condition: Sell shares if the stock price drops by 10% from its peak.

This order allowed me to lock in profits while leaving room for further gains. It’s a set-it-and-forget-it strategy that’s ideal for capturing growth while minimizing risk.

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Execution: Securing My Free Shares

In December 2024, the market took a slight dip, triggering my trailing stop order. FirstTrade executed the sale on December 18, 2024:

Sale Details:

• Shares Sold: 12 (out of 20 total shares)
• Sale Price: $126.65 per share
• Total Proceeds: $1,519.78

The beauty of this sale? It essentially recovered my entire initial investment of $1,533.40. The remaining 8 shares are now what I call “free shares”—stocks I’ll hold indefinitely without any cost basis.

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The Strategy: Buy, Sell, and Hold

This approach is part of my broader strategy to capitalize on growth, recover capital, and hold onto free shares for long-term gains. The steps are simple:

1. Buy: Identify a stock with strong long-term potential.
2. Hold: Let the stock appreciate significantly.
3. Sell Partially: Use a trailing stop order to sell enough shares to recover your initial investment.
4. Hold Free Shares: Keep the remaining shares to benefit from future growth without risking your original capital.

For Welltower, this strategy worked perfectly. I’ve recovered my initial $1,533.40 and still own 8 free shares valued at approximately $1,013.20 (based on the December sale price). These free shares will continue to grow and generate dividends, all at no cost to me.

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Why This Matters

Welltower’s performance underscores the power of smart investing combined with simple yet effective tools like trailing stop orders. By managing risk and locking in profits, I’ve turned a great investment into a virtually risk-free source of ongoing returns.

If you’re looking to make the most of your investments while minimizing risk, consider incorporating trailing stop orders into your strategy. They might just work magic for you, too.