Stocks only return 5%-10% per year. Investing is boring. Timing is everything. I’ll agree with that last one. I intended to not mention ASTY again until my semi-annual portfolio review at the end of the year. So much for those plans. ASTY took the pop that I talked about last time, which was on top of a pop I talked about previously, and popped the top off both of those. Evidently, the stock ASTY doesn’t know that the company it is based on, Asterias, hasn’t changed significantly in the last two weeks. At one point today ASTY was up 359% from its recent low. I almost sold. Timing got in the way. That’s probably okay.
Four days ago I wrote, “My position was up over 200%. I could sell half, take out my original investment, and let the profits be pure.” I wrote about deciding to hang in there for the long term as I usually do. Selling half would let me do that with half of my position; but that position was the smallest in my portfolio. I didn’t want to invest too much time or emotional energy into deciding whether to sell or not. But, I tasked myself as usual and asked what would be a high enough price to pull out my investments while leaving a large enough position. I settled on a roughly four-fold increase and set my expectations to act on that within a few years.
The universe laughs at our plans. Investors can design intricate stratagems, but reality trumps everything. The day I published my post, ASTY went up to 6. The trading day after that, it climbed to 7. This morning it started with a jump by gapping up, and climbed past 8 as I had breakfast. My silly thought experiment of a four-fold increase was no longer a far-off calculation. It was something to calculate now. Ah, but I am a rational human being and decided to ponder the exact number as I drove to work. If it exceeded that number when I got there, I’d put in a Stop Loss order for a quarter of my shares.
Ha! the universe said. When I got in the truck, ASTY was above 8. As I drove in, I realized that approximately $8.80 would meet my criteria. As I got to my office (a co-works space in downtown Langley), I fired up my laptop, saw a blip above 9, arranged the rest of my nomadic workspace, poured my cup of tea, and saw that the stock had dropped to $8.60. I trusted the number I’d estimated, and waited for a possible rebound. It came and went while I dealt with my first client. Through the rest of the day it dropped as if it was bouncing down stairs, then plunged to below 7 and dribbled around in the mid-sixes for the rest of the day.
Who says investing is dull?
It is a good thing that I understand my risk tolerance, know the folly of definite plans, and have confidence in my overall strategy of investing in the company more than the stock. The stock dribbled along above 6. I bought it below 3. A 10% return on a $3 purchase would take seven years to reach $6. The stock’s performance is exceeding my goal. I haven’t optimized my portfolio, but at least that stock is exceeding the market averages.
Investing in startups involves a lot of guesses masquerading as analyses. Startup biotechs can range from below $100,000,000 to almost a billion; yet no one knows the answer until the FDA approves the treatment and the company begins treating patients and getting paid. Hindsight is perfect, and it is too easy to beat yourself up over missed opportunities. If only I’d . . .
I intended to take the night off. I’ve been working seven days a week with one day off every two months for the last year or so. I’m about due. But I wanted to write this post and pass along this example of real life investing: the possibilities, the realities, the utility of engaging somewhat emotionally to maintain interest, but not equating performance with personal judgment. Investing is a tool within a personal finance kit. So are minimizing expenses, maximizing income, and appreciating time. Investing is important. If you are invested at all, congratulations. You’ve enabled opportunity. If you’re doing the work yourself, congratulations again. You’re developing the skills that are useful for a lifetime and applying them to goals you, not some stranger, define. If you are regularly tending your investments, commend yourself for responsible behaviour and the chance to do better than average. If, however, your investments become a reason to judge yourself; step back and remember that they are only a tool and can never be more important than your self.
I picked a number, the market met it, but the time wasn’t right. That’s does not mean I should stare at the screen watching every pixel change waiting for the prime moment. It means I had a good idea, and almost had good timing. Next time it might work out. If this is the only opportunity to sell ASTY at $8.80 then I should get out of the stock now; but there’s no way to know that. And, of course, I am holding the stock because I suspect that a company that can regrow spinal cords will probably have a stock worth much higher than $8.80.
These last few days of ASTY also remind me of the possibility and reality of stocks in small companies. They don’t tend to creep up. They tend to sit nearly dormant, treated with dismissal and derision, until they produce something that is recognized as impressive and profitable. The kind of action ASTY just went through may be mimicked several times as the company matures. The same is true of others that I hold: AMSC, GERN, GIG, and MVIS.
The ability of simple things being recognized for their true worth is enticing and exciting, whether that is in stocks, world-changing discoveries and inventions, or in relationships. It is one reason I know that life refuses to be boring.