Hard lessons learnt

Recently, I just took accepted my loss and exited my position in FOSL. The loss is around 40%. From this, I learnt a few lessons.

Loss Aversion Bias

For quite a while, I was doing trade adjustments for FOSL, doing back ratio, selling naked calls, etc, hoping it would go up. When the stock went up, I had a short window to exit the position at a narrow loss but I still hold on, hoping it would turn profit or break even. This proved to be costly.

Optimism Bias

I was overly optimistic on their acquisition and thought sales would pick up. But on hindsight, it’s an ambitious plan and with other players coming into the wearables, FOSL will have a tough fight ahead. This also happens to other counters I was holding but the loss grew wider such as ANF and CXRX. I had since exited my ANF as well.

To conclude, in our investing journey need to recognise our bias and mistakes early, take the initial losses fast and move on.

 

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