Do you remember how angry some people got at us because we sold out of Fastly at $90 last October when the bad news became clear? Really angry! Like we were betraying their lover! Well I wrote the following in my end of the month summary just a few days ago:
And do you remember Fastly? Nine months ago, last October, it had hit a new high of about $136, but then the really bad news came out, and it plummeted. I sold in the aftermarket and the next morning premarket, and got out of my entire position at about $90, and transferred all that cash into Cloudflare at a price of $56.50. Cloudflare is a competitor, which I already had a position in since July. Many others on the board did the same thing, but there were some who stayed in. They felt we acted too precipitously, that Fastly was already down a lot, that it had great tech, and it would bounce back in time, etc etc etc.
Well here we are nine months later and Fastly is at $48.07 at Friday’s close, down 65% from its high and down 47% from where I sold it. For someone who had a $100 position on Oct 15 and held it, now, after 9 months, it is only worth $53. On the other hand, if they had moved the money into a stock going up, it would be an entirely different picture. That same money into Cloudflare is now worth $210, four times as much. NO! It’s NOT 40% more! It’s FOUR TIMES as much. That’s again the definition of the “Opportunity Cost” of sitting on losers and hoping they will get their act together.
Well, they just announced again, and they are down at $36.15 in the aftermarket. That’s down another 25% from Friday’s close!!! Another 25% from just last Friday! It’s at just 26% of that $136 high, and at just 40% of the $90 where I and others sold it.
But it’s not even that 60% loss that counts. It’s having that money sitting there going worse than nowhere! For someone who had a $100 position on Oct 15 and held it, now, after 10 months, it is only worth $40. On the other hand, if they had moved the money into a stock going up, it would be an entirely different picture. Most of us moved it into Cloudflare, which is up 112% since that day. That same $100 moved into Cloudflare is now worth $212, more than five times as much. NO! It’s NOT 50% more! It’s FIVE TIMES as much. 500% as much!!! That’s again the definition of the “Opportunity Cost” of sitting on losers and hoping they will get their act together.
Don’t get suckered into that mindset of holding forever, no matter what, because you don’t want to be disloyal to the company, and making excuses for not selling, and just hoping against all reality.