I wanted to share two related experiences last week. They do not reflect well on me, but if nothing else, Slope is known for being open and honest, so we might as well continue that tradition.
Let’s begin with this beauty: HP Inc (NYSE:HPQ).
I came into the day short HPQ. I want to say at the outset this was a rational decision. In fact, the chart was pretty damn gorgeous. However, between sessions, rumors flew around that XRX wanted to buy HPQ, so the stock exploded higher.
I was, of course, unhappy about this. The stock was up about 14%, and it was utterly unclear if there was a deal, what the price would be, and so forth. In pre-marketing trading, the stock kept lunging higher, and – – – simply stated – – I wanted the pain to stop, so I decided to get out of HPQ ASAP. I wanted nothing to do with it anymore. So I covered at about the spot where that arrow is drawn.
You can probably guess what happened next. Within moments of my covering in a panic, the stock started slipping lower, and it never stopped falling. And it’s not because the rumors were denied. In fact, XRX made it quite clear they had made the offer, and HPQ said they were considering it. But I covered at just about the worst price of the day. It went on to keep sinking on Thursday and Friday, in spite of the market vomiting to lifetime highs.
So that sucked.
Since God figured I hadn’t been mentally beaten quite yet, it was time for more fun. After Thursday’s close, Stamps.com came out with earnings, and – – yep – – it exploded higher and – – yep – – I was short. Sounds like I must have broken a mirror recently, doesn’t it?
With the memory of HPQ fresh in my head, and my anger at myself for being a completely limp-wristed ghey-boy and covering, I kept telling myself: don’t do it again, don’t do it again, don’t do it again. But I kept having visions of a 18% pop becoming 20%, 30%, 50%, God knows what. Thus, I did something I hardly ever do, which is entered an after-hours order and got out where the arrow is. Again, to stop the pain.
You already see what happened to Stampscom Inc (NASDAQ:STMP). Once again, I covered at just about the worst part of the day, merely because I freaked out and was worried that a bad loss would get even worse.
Now, keep in mind that I’ve got about 50-60 positions at an one time, so it’s not the end of the world, but it still sucks out loud. It sucks even more to have this happen twice in the span of two days. I mean, look, I’m happy to take an occasional explosion once a year or so. But this is ridiculous.
To be clear, I don’t regret being in either of these positions. They were both based on rational choice. I’m disappointed, however, that I let emotion sweep over my rational self and freaked out at, appropriately enough, the worst possible levels. It seems oddly fitting and just. But I’d rather not be the main character in a morality play.