The year has been costly for big-time punters on lithium, with share prices of some ASX-listed lithium stocks falling by more than 50 per cent.
ASX-listed lithium stocks have endured greater than 50 per cent falls in their share prices this year, teaching many lithium bulls a costly lesson about the perils of falling in love with a stock and its “story”.
Sydney insurance broker and retail investor Chris Gray bought just over $15,000 in Sayona Mining shares in April; the share price has since fallen roughly 40 per cent. “Because love is blind, you need to make sure that you have fallen for the right one,” Jennings says. “You need to check that you are not blindly following a sector or trend.”The telltale sign you’ve fallen in love is when you begin to suffer “loss aversion” – a reluctance to accept losses. Loss aversion is a capital killer because not only does it slowly erode your capital, but you also incur the opportunity cost of another investment that could make you money.
Perhaps one of the most bizarre pivots I’ve seen recently was that of ASX-listed eSports company Mogul Games, which after a staggering 96 per cent fall in its share price rebranded itself as the lithium exploration and development company Lithium Universe. The advantage of technical investing – the system I now use – is that you don’t develop attachments to stocks and therefore aren’t at risk of falling in love.
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