Man I really screwed up this time.
I trade penny stocks. I like long plays with strong fundamentals. I’ve been involved with a reverse merger shell for the last 6 or 7 months, in anticipation of the merger company (still unknown) bringing revenue and assets into the ticker, I had established a very large, long position when it was first acquired by a merger custodian. During that time period of the last six months I watched the value of my position go from about $6,000 all the way to around $38,000 and everywhere in between.
I never took any profits on the way up…even at the top. That’s mistake number 1 and I attribute it solely to greed. But that’s not really what I’m writing this post about specifically.
For the past month or two, the ticker has been stagnating with low volume, manipulative shorts, and spam attacks of fake news on its message boards. This has, of course, driven price down, back close to my original buy in point. Well, because I didn’t want to risk losing my principle capital, and in an effort to preserve my liquidity (I was concerned the low volume could prevent me from getting my money out if I needed it), I decided to go ahead and get out of the position early last week. I had almost the entirety of my brokerage capital tied up in a single play (a big no no) which I was okay with because I felt strongly in this play, but rather than slowly scale back my position over time, I decided to go ahead and pull everything out at once.
I knew I was making a mistake. I wasn’t sticking to my plan which was to wait until the reverse merger was finalized and paperwork was made public. I knew from looking at the chart that we were way oversold and would likely bounce up and off of the 200 simple moving average. I knew I was selling at the bottom. But I did it anyway out of a little bit of fear and regret for not locking in my insanely good profits from several months prior.
Then, the inevitable happened. This past week I glanced at the ticker and realized it was already back up almost 150% from the price point at which I sold all of my shares…That’s right, I held a ticker for almost 8 months, saw thousands of percent in gains I never realized, rode it back down to almost nothing, sold everything, and then watched it bounce back up a few days later.
To say I was angry would be a little bit of an understatement. I felt physically ill when I looked at the price. I had to take a little bit of time to console myself, take a break from my computer and look away from the markets for a few hours. After a short nap and some serious consideration of my investing strategies, I realized that my biggest mistake was not sticking to my original game plan.
The fundamentals hadn’t changed. I assessed there to be long term value in the ticker and I was correct, but I let shorts, manipulators, fake news spreaders and uncertainty get to me. And I paid the price, around the tune of about 20k net. I didn’t really lose any of my capital, but I missed out on making a whole lot of money, and sometimes that feels just as bad.
So that’s my story, I have lots of regrets. But I need to use this as a learning opportunity. The merger still has yet to officially take place, so I did take another, smaller position at a much less favorable entry point than before, but perhaps I will still be able to make something on the ride up.
-Come up with a good investment plan. Stick to it. No matter what.
-Do not put everything into one play, no matter how good it is.
-Consider scaling positions slowly
-Don’t sell at the bottom (duh)
-Keep the fundamentals from your own research and the market sentiment separate. Manipulators and shorts will do and say just about anything to get you to sell when you shouldn’t.