It was March 2015, my hair was long, summer was on the run and I was about to buy my first bunch of ASX shares. After doing some reading and research, I had narrowed my selection to 5 or 6 ASX shares that I considered worthy of my first investment dollars.
Among this list was biotech company CSL Limited (ASX: CSL). I was enamoured with the company's products, its already impressive stock price growth and its dominance in the medical space and so went ahead and purchased about 35 shares at around $94 (read it and weep).
The CSL story
CSL is a true innovator and its blood plasma production remains one of the best and most fortified earning streams amongst medical stocks on the ASX. CSL's work with researching and manufacturing influenza vaccines through its Seqirus division places it at the forefront of the fight against the flu (this year's deadly flu season is a tragic reminder of the importance of this work).
Fast forward about three years and CSL had been my standout stock performer. Most of the other (in hindsight, pretty poor) stock picks had either gone backwards or stayed depressingly static – but CSL had charged ahead. I watched the stock price climb to $120, then to $140. At $150 I had thoughts about 'cashing out' and 'taking the profit', because that what the pros do and I thought I was a bit of a genius for latching onto such a winner. Finally, I relented and sold out at $161, taking an 80% profit and feeling pretty good. The price-to-earnings (P/E) ratio for CSL was very high (sitting around 40 if I remember) and I thought that I had ridden the wave to its height and it was about to crash, and I may as well take the cash off the table.
Alas, I then had to endure watching CSL smash through the $200 mark, then $220 and finally $230. Although CSL has since pulled back, it still has a P/E ratio in the high 30s and I learnt my lesson…
Foolish takeaway
If you get a fantastic company on the cheap, never, ever sell unless you have to! Good companies give back by compounding your money in a continuous cycle and the longer you hold the shares, the richer you will become. I wish I could go back and not hit the sell button – I have spent the last two years waiting for a 'buy-the-dip' opportunity to get back in (that still hasn't materialised). But such is life…
