Human beings remember well things which are particularly unpleasant or particularly pleasant. In short, human beings remember extremes very well. However, as investors, we really have to stay level headed and be in tune with the present, the current reality, and not let the past shackle us.
For example, I have a friend who bought a few hundred lots of Healthway Medical's shares when it was 12.5c, if I remember correctly, last year and sold most of them at 13c or so just before the price ran up. The investment in Healthway Medical was one premised on its relatively strong fundamentals and inexpensive valuation. However, any shareholder of the company at the time would remember the months of malaise in its price action last year and my friend divested most of his shares. With only 100 lots left, he became reluctant to sell even as the price rose to hit the eventual technical target I identified at 19.5c shortly after.
When we spoke, he told me, "but I only have 100 lots left". I told him that he must not base his decision on the larger position he once had. He had to make his decision on what he had then which was 100 lots. So, the question to ask was: "if he did not have those hundreds of lots which he sold off cheap (on hindsight) and 100 lots were all he had to begin with, would he sell some, if not all, to realise some gains?" Freed from memories of the past, the answer was a loud and clear "yes". Never be chained down by what could have been. Focus on the present and what is.
Similarly, I have friends who told me that they should have bought Healthway Medical shares at 10c when I first started accumulating in mid 2009. That's the beauty of hindsight, isn't it? These same friends also said that they should have started accumulating Saizen REIT at 10c. The memories of the past chained them down and they could not act in the present.
I would tell anyone that I only started accumulating Saizen REIT at 13c, not 10c, and I kept on buying as its price rose. I bought more at 16.5c too. Why? The uptrend is intact and this has not changed. The fundamentals are still compelling. There is no reason for me to sell if the very reasons which compelled me to buy have not changed and are still valid. Mind you, these reasons could be fundamental, technical or both. I am not a purist. I am a pragmatist.
I might have shared some of these thoughts before in some other posts. I cannot remember but if I am repeating myself, I beg your pardon. Please humour me. Have a great Sunday!