1 Safe Trick to Finally Ditch Your Dud Stocks

Suffering from losses from your once glorious growth stocks? I’ve been there. So here’s a safe way to ditch those dud stocks and finally move on.

| More on:

I’ll be the first to admit that I’m not perfect at investing. And that I am indeed human and not some robot running an algorithm. And humans, as we know, make mistakes. And I think most of us can say some of those mistakes came up in the last years when investing in growth stocks.

Circle back to March 2020

It was a scary time in the world, but an exciting one for investing. We all thought we knew which company was going to be the next big thing. Whether it was tech, e-commerce, even cannabis, it all seemed to be going up and up and up. However, things have changed recently.

During the first few months of 2022, there has been a lot of volatility in the market. That volatility crept into our portfolios, leading to a huge downturn in a lot of cases. The rules we used to follow of leaving only 5% to 10% of our portfolio in riskier stocks seemed to go out the window in the last two years. And now, we’re paying for it.

But don’t fret! If you invested in growth stocks that are no longer growing, there’s a safe trick you can use to get back your cash and ditch those duds once and for all. In fact, I’ll lead by my (embarrassing) example.

My mistake

For me, it wasn’t March 2020 that got me. It was the cannabis boom. I thought that Aurora Cannabis (TSX:ACB)(NYSE:ACB) was going to be the biggest producer on the planet. And hey, I can’t see the future, it could still be! However, my portfolio couldn’t take another pounding from this once glorious growth stock.

When I purchased Aurora stock back in 2017, shares were at about $4.50. They then ballooned to $165 on the event of Canadian legalization! After that, they fell further and further and further, finally reaching a point when they had to merge stocks. To simply make back what I lost, I would have to wait for shares to reach $84 per share. That wasn’t going to happen any time soon.

The solution

Now look, I’m a millennial, and millennials have time when it comes to investing. But I’m also a mom of two kids, and I can’t simply look day after day and hope that shares will suddenly explode by around 8,000%. Instead, there’s another safe trick that I used to get back my cash and move on.

First, I had to see how much I needed to make back to break even. In this case, it was about $750. Easy enough. But then came the trick. I had to find a safe stock that I could invest in to make that cash back in a relatively quick amount of time. And so, I started looking to safe areas of investment for now and the future. For me, that’s fertilizer and finance.

Two stocks to make up my losses

In this case, I looked at buying up shares in Nutrien (TSX:NTR)(NYSE:NTR) and Toronto Dominion Bank (TSX:TD)(NYSE:TD). Both are solid companies with a strong balance sheet and growth portfolio that could help me make back my losses relatively quickly.

Nutrien stock continues to prove its worth, reaching all-time highs already this week as the fertilizer company continues to push our crop nutrients. TD stock on the other hand is one of the largest banks in Canada, and the sixth-largest in the United States. It continues to create partnerships with credit card companies, see strong loan growth, and find new revenue streams setting up investors for strong, stable growth.

Now, the waiting game

Honestly, it didn’t take long for me to make back my money. But that’s because I had money to invest in the first place. By putting $10,000 in each stock, I was able to make back what I had lost in just a few weeks. On March 8, shares of TD stock traded at $95. Two weeks later, TD stock was up to over $100 per share, making $500. Nutrien stock, as you may know, has been doing quite well. After putting $10,000 into Nutrien stock at $120, two weeks later they were up to $130! That gave me a further $833 in my pocket.

So there you have it. Not only did I make back the $750 lost by my Aurora stock purchase, I made even more. $1,333 more to be precise. Therefore I was able to keep hold of my safe stocks, and sell off my Aurora stock knowing I had made back those losses in spades. And in a safe way to boot.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns TORONTO-DOMINION BANK. The Motley Fool recommends Nutrien Ltd.

More on Stocks for Beginners

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Stocks for Beginners

2 Top TSX Growth Stocks to Stash in a TFSA for Life

These two growth stocks may not be the top in the last month, but in the last few years, they…

Read more »

people relax on mountain ledge
Dividend Stocks

Invest $10,000 in This Dividend Stock for a Potential $4,781.70 in Total Returns

A dividend stock doesn't have to be risky, or without growth. And in the case of this one, the growth…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Turn a $15,000 TFSA Into $171,000

$15,000 may not seem like a lot, but over time that amount can balloon into serious cash.

Read more »

A worker uses a double monitor computer screen in an office.
Stocks for Beginners

Why I’d Buy Fairfax Financial Stock Even at Today’s Prices

Fairfax stock just keeps edging higher. But is it now too expensive, or can investors just look forward to even…

Read more »

Piggy bank in autumn leaves
Dividend Stocks

A 5.6% Dividend Yield? I’ll be Buying This TSX Stock for Decades!

This Big Six Bank offers a large dividend, growth strategy, and stability. In short, it offers it all!

Read more »

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

concept of real estate evaluation
Dividend Stocks

Buy 1,154 Shares of This Top Dividend Stock for $492.54/Month in Passive Income

This dividend stock can pay out top cash every month, sure, but has even more to look forward to.

Read more »