I had to laugh yesterday about Mike’s post on Quest for Four Pillars where he suggests that perhaps I don’t have any investing mistakes to share. So in a effort to prove the fact that indeed I’m still mortal, I hereby present my top three investment mistakes.
Well if you recall this post. I have written about this topic before. Yet for those who haven’t been reading the blog that long ago I’ll do short review. My first mistake started with my first stock I ever bought was a junior mining company in high school. I literally had no understanding on what they did and the fact they had no income. I bought it because I liked the name (stupid eh?). So after a year or two I sold having lost all my money (about $250).
My second mistake I’ve also written about. I bought an income trust for its yield with little regard to the books. After a while I realized I had serious doubts about it being able to pay back all the debt it kept piling on. So it was sold for a total loss of about $600.
My third mistake is currently Tahera Diamonds which is currently unable to pay its debts and is under bankruptcy protection (my wife holds this one). Selling at this point doesn’t matter. The stock is SO far down from the initial buy that our $1600 that is in it is beyond recovery. Yet this one my wife and I are ok with because it’s my equivalent of a lottery ticket. It was a pure speculation pick and we knew it going in so I’m not really all that upset.
So total losses to date are $2450. Not a bad price for a very good set of lessons which you might have seen elsewhere (but learning them the hard way has burned them into my head):
- If you don’t understand what the company does to make money. Don’t buy it.
- Don’t reach for just yield without looking at the rest of the numbers, you will likely get burned.
- Speculation is ok if you keep the dollar value to something you can lose and you don’t sugar coat it to yourself. Speculation is NOT investing. Don’t confuse the two.
So there Mike, do you feel better that I indeed can screw up just like everyone else? *grin* Rather than tagging anyone specific with this meme I’m going leave it as an open invite. If you want to share some of your investing mistakes you can do so on your blog and link back here or in the comments below.
This post is now part of the 50th Carnival of Money Stories.