Lesson Learned From Selling a Stock Too Early

Hello guys! Today I felt like sharing with you my experience in selling a stock too early. I’m sure many of you have experienced a similar situation where you sell the stock just before a huge run-up. The company that I’m writing about is New Flyer Industries (NFI.TO) which I sold a year ago before the stock doubled in price.

In March 2014, I purchased 50 shares of NFI.TO for $11.35 per share. My total cost at the time with commissions was about $575. The stock was yielding around 5% dividend, paid monthly. 

In August 2015, I decided to sell my shares because the stock has run up in price and was trading in a $20 range. My selling price was $19.58 per share, so I got $979 for this deal. My profit was about $400 or 70% excluding the 5% dividends. Dividends were just a sweet bonus for holding the stock.

Four months later, the stock just shoots up in price, breaking the $20 resistance level and continues the uptrend move. Today, the New Flyer trades at around $40 per share. So I missed another $20 upside ($1000 profit potential) just because I sold the shares too soon. My total return on investment would have been 240% instead of 70%.


I learned a lesson not to sell the stock simply because it got expensive. What I will try to do in the future, is to reduce the holding by taking partial profits off the table and have the rest of the shares lead to more capital gains. Happy investing guys!
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4 comments:

  1. Pursuit 2 FreedomAugust 4, 2016 at 4:34 AM

    An ouch moment. You bought the stock very well, but probably didn't expect it to rise like that. On the other hand, it could have gone back to. You never know what happens in the future.

    I mainly buy and hold and do not sell even if the stock prices rises a lot. Yes, it can go down also, but it will go up again if you keep it long enough and I want the divis.

    Still, a nice profit on this stock for you. Don't think to much about what could have been. We could all have bought KO 30 years ago if we knew back than what happened in the next 30 years. :)

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    Replies
    1. Dividend Income StocksAugust 4, 2016 at 6:27 PM

      Hey P2F. Thanks for stopping by and expressing your thoughts. I totally agree with your opinion.

      Delete
  2. AnonymousAugust 9, 2016 at 9:18 AM

    This post couldn't come at a better time. I did the same thing last week. Sold my shares of KRO the day before they came out with their Q2 profit announcement and would have made another 1k had I waited that extra day.
    Thanks for reminding me that these things happen to everyone and not to be too hard on myself.

    ReplyDelete
    Replies
    1. Dividend Income StocksAugust 9, 2016 at 11:07 AM

      Thanks for sharing your story! Wow 1K profit potential for an extra day. That would have been awesome!

      Delete

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