This is a painful story. Makes me a little sick to share it, but it’s for a good cause…yours and mine.

Prior to 2017, I considered myself a trader – with mixed success. Sure, I had some big winners, but I also had some big losers. And in some cases, I just held onto a trade way too long, wiping out months of trading profits in one day.

It was exhausting…and not profitable.

One of my trades was with a company called Shopify (SHOP).

I knew about Shopify before taking the trade, they are a “one stop shop” for anyone to quickly and easily setup e-commerce website’s, handling the payments, marketing, shipping and other tools. Huge companies like Tesla use Shopify…as well as tons of with a sole-proprietors making products to sell by hand at the kitchen table.

Below is the chart where my trade is highlighted, in yellow with the blue arrow.

Look at what happened next….a brutal decline.

Of course, since I was a trader, I was out of the trade, looking for the next “winner”.

Here is where the plot thickens…

Even thought I got out of the trade, I knew this was a solid company, it recently had it’s IPO about a year earlier and had moved from the $20’s up to where I was buying it in the $120’s. One might say it was overpriced.

I certainly bought at the high, didn’t I?

What did Shopify do after I sold it and where is it now?

Take a look.

There is my sorry-assed purchase, with the blue arrow. That downturn after I bought it barely registers on this weekly chart. It’s a blip on this chart.

This weekly chart is disgusting. Disgustingly profitable if you were an investor…a holder.

But remember, I was a trader at this time. I got out, looking for the next trade. Yet if I had held, look at where I would be today. Shopify was recently trading around $1,500! That is over 12 times my initial trade amount!

Sure it’s had a recent decline to around $1,185 but I would still be a holder. This stock is still going places. The business is firing on all cylinders.

What was my lesson here?

If I had just bought and held for the longer-term, I would have made over 12 times my initial investment…a “12-bagger”!

When you know what you own – Investing is easier than trading

Time is on your side when you are an investor. That is part of the definition of an investor, actually:

An investor is typically distinct from a trader. An investor puts capital to use for long-term gain, while a trader seeks to generate short-term profits by buying and selling securities over and over again.

https://www.investopedia.com/terms/i/investor.asp

With my method of selecting stocks, I know that I am buying:

• A profitable company
• Financially stable – tons of cash, very little debt
• Rapidly growing sales/earnings
• Small cap…relatively “undiscovered”, so tons of room for growth
• A catalyst – a story about why growth in sales and earnings will practically be on auto-pilot…guaranteed

Sure there are vicissitudes that cause stocks to dip here and there…but when you have everything going for a company (like Shopify), those dips are momentary blips.

Knowing what you own – a company that is growing rapidly, with growth as far as the eye can see, holding is a no-brainer. But only when you use time for your advantage. Let the story play out.

Why Shopify whipped my ass and taught me a lesson

Around this time in 2017, I decided that I needed to “diversify” away from my trading and start socking money away in taxable (non-retirement) accounts. I needed to find stocks to buy…AND HOLD.

Shopify was always in the back of my mind…as I watched it climb – without me.

I became an investor, dollar cost averaging $240 every two weeks. If I could find more Shopify-ies of the world, I would do well.

I had to trust that by consistently investing a fixed amount again and again and again, into companies that had all of the traits I was targeting, time would be on my side and I should do well.

Sure there would be dips, but I would ignore them. I had to trust what I owned. When you know the story behind a company -that you own a real company, not some “pump and dump” turd that has no earnings, a wreck of a balance sheet, issues shares in order to survive, etc…it is easy to hold.

And that is what I have done.

So thank you Shopify, for leaving me in the dust.

You taught me a lesson: I am not a trader…I am an investor.

Glenn