An Object Lesson in Patience

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I did a post back in July about Spectrum Pharma (symbol SPPI), suggesting it had the prospect as a successful long-term long (yes, long) position.

Well, it's up about 50% since that post. Not bad for five months, right? Good for me, correct?

Hey, not so fast. After I suggested this long idea, it went down 50% before going up about 100%. I didn't have the stomach for that kind of drawdown. I think most sensible people wouldn't have held on.

My point is that with these long-term plays, the ups and downs in the early stages will knock almost all holders out of them. People get misty-eyed over the multi-thousand percent point gains they "missed" with stocks like AAPL, but the fact is that Apple had huge ups and downs along the way. Only once you're deeply in the money can you tough out the drawdowns that blow most newer holders away.