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?
No, I never look back. Should have and could have will get me nowhere. I stick to my buy and hold good dividend paying companies, and buy more with my accumulated dividends when they become cheaper. For me, trying to time the market, does not fit well with my investment philosophy.
Hello Michel,
you are a very disciplined investor, it’s very rare! keep it up!
I look sometimes at past transactions. Some were really successful, some others less but always without regret. I try to understand why it was good and why it was bad.
My strategy is solid and I rarely change it – I just ignore it right now by not selling AAPL at $600.
Hey Maurice,
what do you think of Apple? I think it is in a good position to keep riding. I find analysts very difficult with this stocks these days. The value is there and the dividend will keep on rising 🙂
It may be irrational, but i never sell stock with a loss.
I wait for recovery or let it ride all the way to bankruptcy.
Once i doubled down.
I bought APPL at 580 or so, and it went down quite a bit.
Bought at a lower pricepoint again.
And then it went even lower!
So good money after bad money.
However it worked out: a couple years later and APPL is at 591 today, making both purchases profitable.
I sold all my stocks that were in the green when I bought a house.
I kept the ‘losers’ for a better time.
Bram,
I hope you don’t have too many losers in your portfolio. What if the company is clearly showing sings it won’t come back? (like Radioshack for example), you still hold on to it?
I sometimes look at past transactions but I don’t dwell on it. What is done is done. 🙂
Always look forward, for new buys!
Mark
Apple? Purchase the title exactly one year ago at $393. Now at $200 profit in one year I asking myself if I should it now. Is it a buy now? Probably not. A sell? At $100 after the split, probably.
29 May 2013
Sell 200 AGNC at 25.25$, paid $31 some months before
Buy 25 JNJ at 85.65$
Buy 25 KO at 41.60$
Buy 40 LLY at 53.65
Eleven months later, AGNC is down to $22.71, JNJ up to $101.29, KO down to $40.79 and LLY up to $59.10. Gross gain, $1096 excluding dividend and commission which give a gross profit of $850!
February 2014
Sell 1200 ATP at $3.00
Sell 2000 RPL at $0.99
Sell 700 TCM at $2.95
Three months later, ATP is up at $3.27, RPL was up to $1.50 before conversion to Spartan Energy and TCM down to 2.94. Net loss of $1317…
However, with this cash I purchased
30 AGR at 96.80$
100 BPF.un at $20.80
300 AC.a at $5.63
AGR is up to 105.77$, BPF down to $20 and AC was sold at 7.60$ for a profit of $800 for net loss of $500.
These are the only four stocks I sold taking a loss, small gain on the total but a lot let frustration.
I used to when I was buying risky plays for growth. I don’t so much anymore, I leave a position when it is time to go.
Maurice,
it is definitely better to let the frustration go. If not, you might be tempted to take more risk to compensate. good move!
I look back quite often but I do so to try to learn something. Whether or not I might give myself a little kick in the butt now and then for what I feel was a mistake I look at things to try to see where or why I was wrong.
However, until I find a pile of the same types of mistakes in a row, I don’t change my investing style but when I get a series of possible mistakes that look like they happened for the same reason I then to some investigating.
Most of the time it seems to come down to some unreleased news at the time of a sale of mine a month before or just the old saying “You’ll never get in at the bottom or out at the top”
Just keep in mind that knowing where you came from and how can be a great learning tool so never be afraid to uncover where you messed up, if you did.
yes i do ….keep a record of all sales….for better or worse….roughly equal for better or worse
so sometims you win and sometimes you lose….but that is ok….cheers….bobv: