I rarely do this, but I was checking my portfolio the other day and wanted to second guess a few of my recent trading decisions. This is how I went from one chart to another until I found this one:
This is a stock I bought; I held on to it for a while and then, sold it at loss as the company was clearly going nowhere. The problem is that it had taken their biggest bite of a meat in their history and the piece was hard to swallow. Right after 5N Plus (VNP.TO) bought a company twice its size, their market (rare earth) crumbled and VNP was stuck with the huge debt.
I finally decided to sell at a loss after several disappointing quarterly reports. Once I was convinced the company would not be able to adjust to the situation and make it a great company again, I pulled the trigger.
It was a good decision… but the stock has gone up 162% over the past 12 months. The financials are better and its financial statements are back in the black. I remember that my adjusted cost basis was around $5.80 and now, the stock is trading around $5…. If I had waited long enough, I could have reduced my loss and maybe make a few bucks in profits if the stock keeps on rising.
What Am I Going to Do Now?
Nothing. If there is any word of advice for this week, this would be it: never play Monday morning quarterback with your portfolio and try to recover from a bad pass. I will stick to the reasons I had to believe the company wasn’t going anywhere and will look at what I have in my portfolio instead.
I certainly wish I had done some cash averaging a year ago instead of selling, but the point is that you never know when you keep throwing money into the fire (I had done a first cost averaging operation previously with this stock) or that your pile of money will come back from this dark hole.
The Same Thing Happened with Seagate Technology (STX)
A similar situation happened with STX last year too. I sold it with a huge profit (about +72% if I recall properly) on a stop sell. The stock had hit $40 back then and I didn’t want to lose my previous money on a highly volatile stock. You can see the company had its ups and downs from 2011 to 2013:
So when it was around $42 or $43, I’ve put a stop sell at $40 to secure my profit. I didn’t want to lose on what I had gained already upon poor quarterly financials. Because it was all that STX needed to drop like a rock and I knew it. It didn’t take long, the stock lost a few bucks during a single session and my precious STX shares were gone. But the money in my brokerage account felt better than the money I left on the table.
Since I sold it at $40, STX has climbed higher than $60 at one point. But the questions about the ability to evolve for this hard disk giant remain and the stock is now back in the $50 range. Once again, it hurts to think I would have more money in my pocket today if I hadn’t sold, but I must quickly delete this stock from my watch list and move on.
Do You Find it Hard to Stick to Your Investment Strategy?
I’ve always believed that a successful investor is one that follows their strategy and sticks to it. This is why I’ve worked so hard to define mine and do everything I can to not deviate for the sake of profit. So far, I’ve done it right and my portfolio has never showed strong results like this.
Do you find it hard to stick to your investment strategy? Do you ever look back and start second guessing?Google+