| I wanted to write something a bit different today, so everyone reading this understands my mindset. This letter is mostly meant for me.
I hold a sizable position in Lite Access Technologies (LTE-TSX.V) and have for a long time.
On Friday, December 4, Lite Access announced their sole UK customer, CityFibre, “has purported to terminate its engagement of Lite Access under all contracts”, basically announcing that they are firing Lite Access. Clearly, this is bad news and the stock reacted accordingly.
I am selling all my shares, all of them.
I may wait for a bounce or I may just sell them all on Monday. I will wait and see, but by the end of the week, I am unlikely to still be holding any of my shares.
First off, it is a loss. And not a small one.
I hold no one responsible. Not the company, nor anyone associated with the company. I can blame myself but what good will that do? But that is not to say that I take this lightly. This is humbling. Yes, I will learn a bit more from this.
I’ve given myself the weekend to be upset, to question myself, to feel I let others down, to try and pinpoint how I could have acted differently, and yes, to scream and curse a bit. But come Monday morning, I intend to channel these emotions into finding the next winner. I will pick myself up off the floor, dust myself off and get back in the game.
People who know me, know that I like to use plenty of analogies to help describe things, especially investing. Here we go…
“It is easier to give birth than it is to raise the dead”
For the most part, much like other aspects of life, when investing it is easier to be rewarded by starting something new than it is to wait for something old to change its character.
Some might be questioning whether Lite Access is dead or alive, but the point is its likely easier to make back your losses on other opportunities than it is to make it back on one that is struggling. Move on.
How many times have we held on to something, knowing deep down inside, it’s not worth holding but we continue to do so because we are afraid the stock will pop immediately after we sell? Or that the loss is real when we finally sell?
As humans, we are constantly looking for self-validation. Selling losers means we are validating a losing action. It is hard to do, but it’s the right thing to do. Sell your losers quickly and hold on to your winners as long as possible. Be decisive.
I believe investing is a lot like poker. I see a lot of similarities between the two.
In poker, even the best players lose hands, despite the odds being heavily in their favour. It’s what great poker players do consistently over time that determines their fortunes. It is a game of odds, consistency, and luck, just like investing. The process needs to remain consistent, however the outcome is not always going to be the one we want or like. Losing is part of the investing process. Be consistent.
I am not going to waste time determining if Lite Access can be fixed, land a new client, or praying for a miracle. It is clear, I lost this hand and it’s time to move on.
Like many of the other forgotten stocks that have not previously worked out for me, I will search for a new winning stock, quickly replacing this stock which helps me forget it happened. Sell your losers.
Selling a position, even at a loss, can be healthy. It cleanses the mind and the slate. Or at least it does for me.
With the remaining cash from the investment, not only do I want to reinvest these dollars, but I also want to reinvest my mental and emotional currency. It can be hard to focus on new ideas when your mind is bogged down from previous investments. Mental and emotional currency is much more valuable than physical currency. Use your currency wisely.
I’ve spent decades training myself, both mentally and emotionally, to be successful given my investing process. A lot of good investing is knowing when to hold’em and when to fold’em – especially with microcaps. Losing is not fun, but it happens.
Writing this helps me mentally prepare myself to get back to work.
Monday morning is fast approaching, and I’ll be ready to get back at it. I’ve picked myself up off the floor and dusted myself off…… It’s time to find the next winner.
All the best,
Paul Andreola
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