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Am I making a terrible mistake by hanging on to Bitcoin and the Sirius Minerals share price?

One of the most common mistakes that investors make is clinging on to their losers. Too many of us hate to admit we have made a mistake and grimly sit on our losses, hoping our fortunes will change. Some even invest more money into them. I know, I’m one of them.

High risk, low return

Two very different but risky investments in my portfolio have performed poorly over the last year or so: crypto-currency Bitcoin and Yorkshire-based polyhalite potash mining company Sirius Minerals (LSE: SXX). Am I making a mistake by hanging in there with both?

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I came a little late to the party with both trades, although thankfully not disastrously late. I started buying Bitcoin in early 2017, when one coin cost around £1,000. I think the highest rate I paid was around £1,500, before it all got too expensive for me. On 15 December the price spiked at around £14,750 ($18,993) and I was starting to feel pleased with myself.

I should have sold them, but I didn’t. I hung on until it dipped to around £5,000, and I’m still clinging on to most of my stash, but for what reason exactly?

Bits and pieces

Cryptocurrencies are an amazing technological achievement that is still looking for a practical purpose. I can only see one real world use for it, and only then if you live in Venezuela or Zimbabwe. Otherwise it is simply a speculative investment. That is why I bought it, and why I’m still holding.

There is a slim chance that Bitcoin could swing back into favour and I don’t want to kick myself if it does take off again. Call it fear of missing out. Daft, I know, but at least it’s only a small part of my portfolio.

More fertile ground

I bought multi-nutrient future fertiliser producer Sirius Minerals a couple of years ago at around 21.44p. Today it trades at 19.5p, which is a drop of around 9%. Not massive, but disappointing nonetheless. Am I selling? Not on your nelly.

Ironically, I bought Sirius because I thought it was ‘cheap’ at the time. The share price had almost halved from a high of nearly 40p, so I thought I’d found an attractive entry point. As I’ve noted before, the time to buy a stock like this one is on the bad news, rather than the good.

Long game

The Sirius Minerals share price has struggled to make headway but that was always going to be the case, because this is a long-term project. As well as the mine itself, the company has to build a 23-mile underground tunnel to export facilities at Teeside, with the whole project costing several billion pounds and no revenues until 2023, even though it has been signing a string of supply agreements with major customers in South America and Asia.

The stock is down 48% in six months and the uncertainty looks set to continue but I always knew this was going to be sticky. I told myself I had to be patient, and keep my nerve, and that’s what I’m doing.

Getting Rich Slowly

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Harvey Jones owns shares of Sirius Minerals. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.