Two Blunders: Selling at −31% and −56%

Anyone can show you their winners. Here are two trades I got badly wrong, and why I published the losses the day I took them.

I grew up playing chess, about sixty or seventy tournaments' worth. In chess, some mistakes are so bad there's no salvaging the game afterward. The technical term is a blunder.

In April 2025, I told my subscribers I had made two blunders in the portfolio: NorAm Drilling, an illiquid small-cap onshore drilling stock, and EuroDry, an illiquid small-cap, highly indebted dry bulk shipper. The positions were down 31% and 56%.

The anatomy of the mistake was the same in both cases. Illiquid stocks with a story I liked, held while the fundamentals stayed in limbo. But the real error was holding and hoping for a resolution, since selling into an illiquid market meant taking a terrible execution price. I couldn’t just ‘hit the bid’, so I kept holding and hoping volume would recover and I could get out gracefully.

For the hundredth time, the market taught me that hope is not a strategy.

So I sold both, let them rip on thin bids, at −31% and −56%.

From Reminiscences of a Stock Operator:

A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does the damage to the pocketbook and to the soul.

Why publish this? Three reasons.

First, because subscribers deserve the whole record. Buy reports are aplenty. Anyone can issue a Buy note then circle back three years later with an “I told you so”. In my newsletter, I track every position with cost basis and size. That accountability changes how you trade. You cut faster when you know you'll have to write the sell note (in the last 5 years, I have closed out 200+ trades).

Second, because the losses are where the trading discipline shows itself. In the 2025 Explorers portfolio, 5 picks out of 21 lost money. The portfolio still returned +123.2% for the year, because the losers were sized right and cut fast. You don't need to be right every time. You need your losers small and your winners left alone.

Third, because the pattern is the lesson: position size must match liquidity. A 3.5% position in an illiquid small cap is really a 5%+ position, because you can't exit at the screen price. Expensive tuition, lesson learned.

That same month, I sold a string of underperformers – notably TETRA Tech at −10%, Danaos at −15%. Plucking weeds, so the capital could go to work in stocks that were actually performing. Several of those replacements became the +200% to +500% positions sitting in the portfolio today.

The premium newsletter is the whole record - the 3x takeovers and the −56% blunders, published in real time with position sizes on everything.

Good Trading!

Kashyap Sriram

hello@kashyapsriram.com