On Selling

Today, I want to talk about cutting loss quickly. 

Cutting loss is mentioned in "The Art Of Execution" by Lee Freeman Shor. It is a very short book, but it contains very important ideas. The book talked about Assassins i.e. investors who were quick to cut losses. This is because large losses is harder to earn back e.g. To earn back 50% losses, you need to earn back 100%. 

More info on "The Art Of Execution": http://sanjaymeena.io/books/book_notes_the_art_of_execution/ 

https://gavin-baker.medium.com/lessons-on-winning-and-losing-as-an-investor-from-the-art-of-execution-e6aafe817038 

Personally, I experienced the importance of cutting loss quickly in Eagle Hospitality Reit. 

End 2019: 

-- Held shares in Eagle Hospitality Reit. 

-- Share price started falling in late 2019 due to negative news and large shareholders selling 

Early 2020: Share price fell further Sold ~2/3 of my position in Feb-Mar to cut loss End Mar 2020: Stock is suspended. I had ~1/3 position left in Eagle. 

On hindsight, I should have sold all the shares quickly in Jan-mid Mar. After this incident, when there is losses due to unexpected fundamental reason, I will sell half of position first. Then I can take my time to determine if I should sell the rest. This rule was applied to some stocks lately, although the selling may not be fast enough 

Yuzhou Property 

21 Mar 2021: Announced profit warning. Share price fell from ~$3 to ~$2.70 

25 Mar 2021: Provided more details. 

26 Mar 2021: Share price fell to ~$2.3x. I sold half of my position here. 

31 Mar 2021: Sold the rest, after further thoughts and to deploy the money to other stocks 

 AEM 

End Apr 2021: Started building my stake 

Early May 2021: 1Q 2021 report is out and showed unexpected earnings decline. Sold all my stake in AEM, taking a small 8% loss. 

JD.com 

Early May 2021: Started building my stake 

Mid May 2021: Found an error in my analysis. Sold all my stake in JD, taking a small loss 

In summary, I must continue to cut losses fast. In addition, I will continue to have diversified portfolio, as my stock ideas have significant probability of being incorrect.