Over the last 13 years I have bought and sold many stocks
for clients and myself. Some I sold too soon and some I should have should have
never bought. When it comes to investing there is no crystal ball and it is nearly
impossible to buy at the low and sell at the high.
I have learned the hard way that one of the most important
qualities of a successful investor is patience. As they say, “patience is a
virtue”; and I cannot agree more.
I can go on and on about patience, but the best way to show
you what I am referring to is to lay out real life examples of stocks we
currently own for some of our clients.
Schweitzer Maudit
International (SWM) was originally purchased on 2/5/13 at $40.40 per share.
The stock was pulling back from an all-time high it hit two weeks earlier and I
felt it was time to get into the stock. The PEG Ratio was 0.71 and both the
fundamentals and technical were in our favor. That is until 2 days later the
street was not kind to the stock after SWM reported fourth quarter earnings.
The stock fell dramatically the next day, but my view of the
specialty paper company did not change and as hard as it was to hold onto the
position, I decided it was the best move at that time. Thankfully I did hold
because the 10% loss within three days has turned into the stock now sitting
with a gain of 14% and at a new all-time high. Our stop-loss of 12% was never
broken and the end result is another winner!
FMC Corp (FMC)
was originally purchased on 6/25/09 for $23.75 per share (split adjusted). The
stock fell by more than 10% after the purchase as it now appears the buy was a
little premature. But, similar to SWM I felt FMC was a solid long-term buy that
was undervalued and the chart was improving. So I stayed with my original
analysis and it paid off handsomely.
On 6/20/12, nearly three years after the original purchase I
sold half my clients shares at $52.55 with a gain of over 120%. The chart still
looked good and the fundamentals were not flashing sell, therefore I felt it
was prudent to let half the position go and be patient. At the same time taking
a profit of that size is never a bad move. The patience has paid off as the
stock continues to move higher and recently closed at a new all-time high and
the original position is up 165%!
I will disclose that not all positions workout with patience
and there is a fine line between patience and hope. If you are simply “hoping”
a losing position comes back from negative territory you need to sell
immediately and take the loss. Hope is not a strategy in investing or life.
