Novo Nordisk – an update after the drop and one costly lesson in discipline
Ten days ago I wrote here about my largest position in my portfolio – Novo Nordisk $NVO. At that time the stock reacted with a sharp drop to news from clinical trials, and I wrote that I was prepared to endure that volatility because I believe in the company’s long-term growth potential. Since then the situation has developed in an interesting way. And it also reminded me of one very important thing: discipline in investing.
A fair punishment for indiscipline
As we all know, rules should be followed. Especially those we set for ourselves. My investment strategy rests on three simple rules:
- don’t use leverage
- don’t open short positions
- don’t invest in commodities
But with $NVO, after the sharp drop on February 23 I did exactly what I shouldn’t have. I couldn’t resist and opened a new position with 5x leverage. And exactly what often happens when someone breaks their own rules occurred.
The stock continued to fall to about 36.30 USD, where I had a stop-loss set. The position was closed and I exited the trade with a loss. Since then the stock – as sometimes happens – has been fairly calmly making its way back up.
So a simple summary: a fair punishment for indiscipline.
My current strategy:
Despite this experience, $NVO remains my largest position and the long-term investment story, in my view, hasn’t fundamentally changed. The only change is that I was reminded again why I have my three rules.
Therefore I’m returning to my original strategy (until the next costly lesson when I again think I’m smarter than the market):
no leverage + no shorts + no commodities
And above all patience.
What’s your view on Novo Nordisk ($NVO) after the recent news?
Do you still believe in the long-term growth of the obesity drug market, or is the competition starting to become too strong?
The English version of this post is available on my profile on www.etoro.com. If you want to follow me there or copy my USD portfolio, I would be very happy!
Thanks so much for sharing this experience. I think it will help a lot of investors.
I struggled with this at the beginning of trading and investing too, and I made a lot of mistakes. I got carried away and FOMO took over. But it's important to recognize it and try not to repeat those mistakes. From personal experience I know it doesn't always work out 100% of the time.
Anyway, I have shares of $NVO in my portfolio and I plan to hold them long term. After the recent drop I also bought more.
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I had the stock for about two years, but then I sold it at about a 2% loss; it wasn't a large position. It felt too volatile, so I learned my lesson and didn't buy it again. However, I got burned on HIMS, which I'm holding at roughly a 20% loss. I don't plan to sell for now, but after any sign of recovery I'll get rid of the shares and avoid the healthcare and beauty sector by a wide margin.