Every so often, I take you through an ASX stock to demonstrate how much money you could have made if only you invested it a year or two ago.
The latest edition of this exercise though, stings a little more personally than others.
Let's take a look at online luxury fashion retail platform Cettire Ltd (ASX: CTT).
Cettire vs the world
Back only 19 months ago, the Cettire share price was languishing at 38 cents.
It seemed everything was against this business.
Consumers were hurting from rapid interest rate rises and cost-of-living pressures. High-end fashion brands were unhappy that the deliberate scarcity of its products were deteriorating via an online platform.
It just did not seem like the world wanted $20,000 handbags.
I had some Cettire shares at that point. Let's say you bought $20,000 worth to join me on the ride.
Like any good long-term investor, I wanted to ride out this short-term pessimism. So I held on to the ASX retail stock.
Cashing in at 163% profit
Only a few months later, in mid-September of 2022, my faith had been rewarded.
The Cettire share price had rocketed a massive 163%.
The economic conditions were still similar though, if not worse. Consumers had endured three more rate rises, inflation was still raging, and luxury goods makers were still unhappy about Cettire selling to the masses.
I thought, let's not be greedy. Let's sell while this retail stock is buoyant, to reduce risk.
If you exited with me then, your original $20,000 would have turned into $52,600.
That's an outstanding return in the space of just one winter. You'd be pretty happy with that.
If you learn nothing else from this retail stock…
But look what's happened since.
Cettire, both the business and the stock, have gone from strength to strength.
Now the share price is trading above the $4.50 mark.
That $20,000 investment you made? If you didn't sell out when I did and instead held on, it would now be worth a whopping $238,947.
That's a near 12-bagger in just 19 months.
There are two morals to this story.
First is that making a substantial profit is a terrible reason to sell. It's not a decision made about the future of the company and the stock.
Second is that only a few winners will wipe out all the losses from your duds, if you have a well diversified stock portfolio.
Have a think about that when you make your trading decisions.
