We left off part one of our story with my friends and I being up substantially in our investment in matter of few weeks. We were loving life having made what most people make in a year in matter of few weeks. Here is where the story takes a bit of a dark turn.
I remember this day well. I was in class, looking at the stock price going higher and higher. Then BAM! the company was halted. Although I was a novice trader at the time, I still knew that when the whenever the alphabet boys step into a situation it is never a good sign. By alphabet boys I mean SEC, FBI, FDA, ATF… you get the point, in this case it was the CSA, the Canadian Securities Exchange. They halted the stock because of how fast it was moving, without any indication or reason for the move. meaning it was a pump and dump.
Imagine the horror of watching all of your gains leave your account in matter of hours. On that day, the stock opened at about $0.45 went as high as $0.64 and dropped as low as $0.34 and finally closed at about $0.40.
The next day was even worse. The stock gave back almost all of its gains from the initial run at the open. Dropped as low as $0.24 and closed at $0.34. I hope you never go through the feeling of losing about ~60% of your portfolio in two days, but most of my profits were gone. I couldn’t believe it.
The discussion went from, “we could potentially graduate debt free from medschool” to “what are we going to do now? and how can we not go broke in the coming days?”
We decided that we believed in the company, we believed in the product and we still believed that it could make a comeback. So we held our shares and stayed glued to the computer screen for the next few days.
The stock rallied and the price of the shares finally came back. I was still up significantly. in the coming months, but I decided to keep my shares and for the next few months I saw this happen…
And I still held on those shares…
It was Godon Gekko from the movie WallStreet that said:
The point is, ladies and gentleman, that greed — for lack of a better word — is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.
He may be right, greed can be good, but like all things in moderation.
Don’t be too greedy and Set stop losses, especially when you’re dealing with penny stocks. If wasn’t too greedy, I could have taken my profits at any point and walked away a happy man! But I was too greedy. I was greedy when I was up thousands and I was greedy when I was up hundreds.