Investing Series: Trust your instincts

So in lieu of teaching you something, I’m going to tell you something I learned recently: When you feel uneasy about a stock you’ve purchased based on what you’ve been reading.. GET OUT.

As an experiment, I “spent” about $3300 buying some Blackberry stock (BBRY) when it had hit a low of about $11.75, just out of sheer curiousity and let’s admit it, greediness to see if I could turn a profit.

I saw it hit the heights of $18 and thought:

Hmm.. should I sell?

I have a profit of about $1000 for the taking after only a month or two in.

Stupidly ignoring my instincts to grab the money and run, I didn’t sell the stock.

…then I watched it slowly drain down, lower and lower, losing profit along the way until it was unbearable to me that I might actually LOSE MONEY, and I couldn’t eat the poisoned pie that Blackberry CEO Heins was trying to proffer.

(The only blackberries I’ll buy from now on)

So I set a limit sell price of just about the same price I bought it at.

This time, I didn’t ignore my instincts the second time around that it would plummet and I would lose the entire amount, and I sold.

Luckily, the market on some freak bit of news, shot up to the point where my stocks actually sold, and I was left with a loss of only $10, plus any buying/selling fees incurred by Questrade.

PHEW!

Still, I’d like to point out that even if I had lost EVERYTHING it would have only been about $3300 down the drain at its maximum damage. Not exactly a crushing blow to my net worth, but I’d rather not lose it if I can help it.

Today, I feel totally justified and vindicated for having dumped the stock the second time around, which soothed the bruising taken from the first time I ignored my instincts, because the stock took a real beating today (September 20th):

Thank goodness.

Learn from my mistake.

DO NOT IGNORE YOUR INSTINCTS!

If it walks like a duck, quacks like a duck and looks like a duck… it’s probably a duck and not a swan or something exotic.

I shouldn’t have ignored my instincts when I saw the share price hit $18, but sheer greediness blinded me and I can only thank my lucky stars that my hard-learned lesson only cost me $10 or so, rather than having it end up being a far more expensive lesson.

Actually, maybe EVERYONE should learn this lesson first-hand to really grasp it at its core, but I suggest you go in with only what you can afford to lose (which I did), so that you don’t lose your shirt.