Thanks for the questions MC. Let me do my best to answer.

 

Firstly, Orbite is rather an unusual investment for me. I typically like to own stocks that have a very strong margin of safety (i.e. some combination of cash on the balance sheet, minimum debt, strong free cash flow, trading at attractive multiples). Orbite doesn't really fit into this category. Orbite has potentially industry-disruptive technology, a strong business model, and great future revenue/earnings potential.

 

As a result, Orbite's not really a company that I can value using typical valuation metrics - or put another way, those valuation metrics rely on future revenue/earnings potential that are relatively uncertain/unpredictable. Because Orbite trades so much on future potential, it can be extremely volatile, and is extremely vulnerable to extremes in sentiment. It's share price is also very vulnerable to being maniuplated IMO. The recent move from $2.10-ish up to $3.90, and then back down to its current price around $2.50 is a case in point.

 

So a significant part of how I manage risk is to (a) expect volatility that leads to extremes in sentiment, and (b) "lean against" extremes in sentiment by accumulating shares in times of pessimism and lightening my holdings when parabolic moves to the upside begin to break down.

 

Regarding the "emotion" that was driving me to press the sell button at $3.30 or whatever it was, it was absolultely fear of protecting my recent gains. Where the "fear" came from was the belief that in an important way, the recent parabolic rise was "illusory" - that is, that someone was manipulating the share price, or that the share price had risen based on an extreme in sentiment. There was very little underlying buying power supporting this parabolic rise in price. The key event for me was the flash crash from $3.60-ish down to $3.05 or whatever in a matter of seconds. That and the subsequent weakness in the stock led me to believe that this move was not primarily driven by long-term patient capital, but rather by speculative investors at best, or market maniplution at worst.

 

OTOH, I found myself growing increasingly hopeful/optimistic about Orbite's medium-term share price performance when the share price dipped this summer below $2 into the $1.60 range, and then eventually rebounded and held the $2.10-$2.20 range. My average purchase price was probably $1.90-$2.00. Partly this growing optimism was news flow related (PEA validated, a string of very positive news releases), and partly I felt that short interests had thrown everything they could at the stock, and the overall sentiment towards the company by Mr. Market was extremely cautious. My fear was mitigated because, in my view, the share price had really been pummelled, and was now starting to show strength.

 

So I think you've really hit the nail on the head MC when you said "Wouldn't be more selling when you are in the red a real move driven by fear and capital preservation, justified or not?" I mean that's just it. That's when most investors are probably most fearful, or at least most inclined to act on their fears. I want to wire my emotions so that I'm MOST fearful (i) at moments of general market euphoria (when percieved risk is low, but actual risk is very high), when (ii) the market is just about to realize, or has just started to realize, that the euphoria is not justified. Conversely, I want to be MOST HOPEFUL (i) at moments of extreme lows in market sentiment (when perceived risk is extremely high, but actual risk is low), when (ii) the market is just about, or has just started, to perceive that the extremely negative sentiment is not justified in the price of the financial asset. Of course, that assumes that my fundamental analysis is sound - because there are times when a parabolic rise in share price, or extreme drop in share price is FULLY justified, and not just an extreme in sentiment.

 

BTW, I would much prefer if Orbite only traded on fundamentals, and was not prone to extremes in sentiment. Then I could just buy at attractive prices, and watch my investment steadily grow as Orbite successfully executes on its business model, and sleep well at night. Furthermore, I wish the broader markets weren't fundamentally driven by credit, which also leads to booms and busts, and makes the fundamental value of stocks extremely hard to assess on a forward looking basis. Finally, I wish the Federal Reserve would die a quick and painful death.

 

Alas, Orbite does trade on speculative sentiment (and is also manipulated IMO), and the broader financial markets are driven by a highly unstable monetary system, which leads to booms and busts that follow credit cycles. Thus, to smooth out the volatility of my portfolio, manage risk, and protect my gains at market tops, I kind of feel forced to (i) always seek out a margin of safety in my investment if possible, (ii) lean against extremes in sentiment, and (iii) manage my broader investment portfolio with deep respect for the nature of credit cycles - seeking to be fully invested in equities at the bottom of the credit cycle, and moving to a strong cash position/physical bullion near the end of the credit cycle (which I believe we are either at, or within a year of).

 

Anyway, FWIW. Hope this helps.

 

glenn