I’m Shit at Trading Stocks
You’re probably shit at trading stocks too
I suck at picking the stocks that are about to go up. And to make matters worse, I’m even worse at choosing when to sell should my chosen stock actually go in the direction that I predicted it would. So, these days, I avoid speculative investments or pretending that I know what I am doing when picking stocks.
A few years ago, I discovered a mining stock that looked amazing on paper. This company had everything going for it:
- A mine located extremely close to rail and a port
- Approval to use said rail and port
- Funds available to construct said mine
- A proven ore body
- Contractors signed up to commence work
- All government approvals in place
It was a no-brainer of a purchase. And I got in at an incredibly cheap entry point. And, within a matter of weeks, I had seen a 100% gain. Upon realizing this surge in stock price, I sold all of my holdings immediately, eager to make a profit.
Months later, the stock was up 1000%. I had walked away from thousands of dollars in profit because I got greedy. I’m now too scared to look a the value of the stock. I just don’t want to see that I turned down even more profit.
The one thing that eats at me to this day, is that I knew that this stock was a great medium or even long-term hold. My knowledge of the mining sector is good. I know how to identify a company that will actually progress a mine to development. And yet I jumped off the train way too early.
No matter, let’s cling on to a stock that has suffered a 90% drop in value
At around the same time as purchasing my guaranteed profit maker of stock, I researched and purchased another stock — ASX: decision-making IMU. While the stock discussed above was roaring to massive heights, this one dropped by as much as 90% in value during the same period.
IMU is a biotech company in the cancer research space. When I discovered the company, I was very excited about its mission and the research and trials that the company was undertaking.
Everything that I read about this company pointed to positive price movement and a potential buyout by Big Pharma which typically means big gains for the owners of the stock.
The positive news about the studies and research undertaken by IMU kept coming (and keeps coming to this day) but the biotech sector had rapidly fallen out of fashion, with all biotech stocks at this time taking a massive dive off a very high cliff.
IMU was no longer the flavor of the month and my speculative stock portfolio was looking very sad indeed. But to this day, I am supportive of the research and trials that this company is undertaking. And I cling on to my holdings in the hopes that they will one day rise to (and ideally beyond) their former glory of 50 cents per share (while currently sitting at around 12 cents per share…).
There have to be some lessons here, right?
The costly decisions that I have made in the quest to make stock trading profits have taught me one thing.
I suck at trading stocks.
Speculative stock trading is not for me. I would even suggest that it isn’t for many investors. In my case, there are a few reasons why short-term trading or speculative stock investing isn’t for me:
- I don’t have the time required to properly research stocks
- I don’t have the time to closely monitor stock movements
- I don’t have the patience, or time, to constantly monitor new announcements made by companies that I hold (or plan to hold) to understand how these announcements might influence future stock movements
- I quite simply don’t have the patience or time for any of this.
I don’t like constantly monitoring my stock holdings. And this is fine. Most investors don’t want to constantly monitor their stock portfolios. There’s nothing wrong with this.
Today, I only invest in stocks and funds that I know I can hold for the long term. I invest in stocks/funds that pay regular dividends which, over the medium-long term, maintain (or ideally) grow in value.
I love dividends. But I also love seeing my stocks grow in value over time. So when looking for investments that meet these two criteria, the selection of stocks or funds available to choose from is small. And that’s great. Limited choice brings easy decision making — I know what to buy when funds are available to invest.
Happy investing
