How I Learned the Hard Way: The Agony of Missing Out on a xx Gain

As someone in the world of options trading, let me tell you: selling too early can sometimes feel like a gut punch. I've held positions in stocks that later skyrocketed after I took my profits, and that lingering thought of "what could have been" can haunt even the most seasoned traders. Masayoshi Son’s experience with NVIDIA (NVDA) is a stark reminder of this.

The Billion-Dollar Mistake: Selling NVIDIA Too Soon

Let's recap the context here. A few years ago, Masayoshi Son, a renowned investor and the visionary behind SoftBank, sold his nearly 5% stake in NVIDIA for just under $4 billion. At the time, it may have looked like a savvy move. After all, pocketing billions in profit is no small feat. But had he held onto his shares, they would be worth an eye-popping $180 billion today. That’s a 45-fold increase he walked away from—a real-life “what-if” scenario that we can all learn from.

Why Selling Too Early Hurts So Much

When you’re an options trader or investor, you constantly face this dilemma. Should you bank profits while you’re ahead, or hold on for potentially bigger gains? Selling too early hurts because you realize you were holding something of value, but didn’t fully capitalize on it. In my experience, I’ve found that selling too early can be more painful than missing out entirely. When you miss out on an opportunity you never took, it’s just an abstract regret. But when you had it, sold it, and then watched it soar, it feels like money slipped right through your hands.

The psychology of loss aversion, the pain of giving up potential gains, is real and often amplified in high-growth sectors like tech and AI. Like Son, I’ve sold promising positions early, thinking I was taking the smart, conservative route. While I can’t say I missed out on a 45-fold return, I've certainly left substantial gains on the table.

Lessons Learned: Hold with a Strategy, Not Just Hope

1. Understand the Long-Term Potential The more you know about a stock’s long-term potential, the less likely you are to bail early. When I trade options or take long positions, I look beyond price charts. NVIDIA was more than a chipmaker—it was riding the wave of the AI boom and revolutionizing everything from autonomous driving to cloud computing. With this understanding, I might have taken partial profits but would likely have left some skin in the game, especially if I felt the tech was on the cusp of breakthrough growth.

2. Don’t Let Price Alone Dictate Your Actions It’s tempting to sell when a stock has reached what feels like a peak. But looking only at price changes or past highs is shortsighted, especially in industries like AI where growth can skyrocket. In my years of trading, I’ve learned to avoid letting a stock’s current price overshadow its true value. This helps me think long-term, weather short-term volatility, and only exit positions when I believe a stock’s growth trajectory is in decline.

3. Set Reasonable Profit Targets But Be Flexible Having price targets is part of any trading discipline, but being flexible has saved me from regrettable exits. When I’ve felt overly eager to lock in profits, I ask myself: What’s my exit strategy if this goes higher? Flexibility is key because it lets you hold on when the fundamentals suggest there’s still more room to run, rather than being boxed in by arbitrary targets. For high-growth stocks, especially in AI or disruptive tech, staying adaptable has been essential.

4. Take Partial Profits I’ve found that a good middle ground is taking partial profits. If I’m sitting on a significant gain, I’ll sell a portion to secure profits while letting the rest ride. This way, if the stock keeps climbing, I’m still in. And if it drops, I’ve already locked in some gains. This technique allows me to capitalize on potential upside without facing total regret for selling too early.

5. Keep Emotions in Check The regret that accompanies a missed opportunity can be powerful, but as an options trader, I can’t let it dictate my decisions. Emotional decisions often lead to a string of reactionary trades—chasing the next potential big winner or overly hesitating on the next position. By sticking to a defined strategy, I minimize these emotional swings. I remind myself that every trade is a learning opportunity, and a structured approach ensures I don’t get swept away by “what could have been.”

Experience Speaks: My Painful Sell-Off

One of my most memorable trades was with a cloud computing company that I sold right before it became a darling in the industry. I had analyzed its earnings, calculated a target price, and once it hit that mark, I took my gains. Just a few months later, the company announced major partnerships and its share price nearly tripled. While it wasn’t a loss in the conventional sense, the experience taught me to look beyond immediate profits and assess potential future value before exiting.

When I reflect on that trade, I realize I missed the bigger picture. I was focused on my short-term goal and didn’t give enough weight to the macro trends that were pushing the company’s growth. The experience was painful but invaluable—it reshaped how I think about taking profits and inspired me to hold onto future positions with a broader perspective.

So, Is Selling Early Really More Painful?

In my experience, yes. Selling too early on a winning stock often feels worse than missing out entirely. With stocks you never held, the regret is theoretical. But when you’ve held and sold, and then watched the stock’s price soar, that loss feels tangible. Masayoshi Son’s experience with NVIDIA underscores this point on a grand scale. For him, letting go of a stock that later grew 45-fold might not have been life-altering, but the lessons from it are clear: when you believe in a stock’s future, and it aligns with long-term trends, sometimes holding on is the best choice.

In the end, every trader needs to weigh their risk tolerance, goals, and strategy. And remember, each trade is a chance to learn and refine your approach. In the world of options and high-growth stocks, sometimes the most profitable move is learning to trust in the potential of your picks, even if it means holding through the rollercoaster. Happy trading, and may your profits be as high as your confidence in your strategy!