Losses Bruise – Missed Opportunities Scar

I had broken my cardinal investing rule about a month earlier, and now it was coming back to haunt me in a cruel and twisted way…

Up, up, up. The stock kept climbing. “Fuck me,” I mumbled under my breath, hoping no one within earshot heard. I literally just screwed myself out of about $350K in profit on a $30,000 investment!

The rule I broke:
Never deny an opportunity you believe in because of a fear of losing money.

How did I break this rule?

Winter was coming, the days were getting shorter and market sentiment was tanking. So, I decided to sell all of my shares in a relatively new tech IPO (which I believed had tremendous upside) because I was concerned about macro-economic issues – issues that were unrelated to the company, but threatening to the overall economy. And, despite this company working on a technology that was relatively insulated from economic woes, I sheepishly adopted the herd mentality, and took my risk off the table. I made some money on the sale, nothing life changing, but now I was out. No skin in the game.

In short, instead of risking a loss of capital, I forfeited an opportunity. Big mistake. That’s a loser’s mentality.

About 30 days after I sold, the company made a breakthrough. Despite the economy taking a dive as I thought it would, the stock took off, just as I believed it could, going absolutely parabolic. Over the course of about two weeks this stock proceeded to increase in value almost 2,000% from my initial buy price…

It still bugs me to this day, and writing about it certainly doesn’t help my psyche… but there is an important lesson here.

Don’t surrender opportunities because you are afraid to lose. Accept the possibility of financial loss. Recognize that you learn more from your losses than you do from your wins. If you can truly get comfortable with that, and are willing to work your ass off to find opportunities, your rate of success, ironically, will go up.

I’ve seen it throughout my career as an investor and entrepreneur. Those who decide that a risk is worthy of their time and capital, and adopt the mindset that they will see it through, win or lose, reach greater financial heights. They’ve become comfortable with risk. In fact, they embrace it. That’s not to say they don’t have losses from time to time. They most certainly do. But I’ll tell you what they don’t have: regrets. And they typically have larger bankrolls as a result.

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It’s simple to deal with a loss. Time heals that bruise. However, watching an opportunity pass you by which transpires into a success, all the while knowing you could have capitalized on it… that is a wound which scars, leaving behind a big mark also known as regret.

Stay hungry,
Aaron Hoddinott signature




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