rpadebet Posted February 27, 2017 Share Posted February 27, 2017 After a brief self imposed hiatus (due to various reasons) I thought I would re-join with a confession. My worst investment mistake netted me a gain of 40% in less than 6 months. Before you guys think this is some display of false humility or disguised gloating, allow me a chance to explain: In late summer of 2012, when I was a clueless "investor" (still suffering from it, but it was worse then), I bought a bunch of Facebook stock. Those days I hadn't read any of the value investing principles. Thought Buffet was just another Democrat who made a bunch of money in the market/business. Had suffered through losses in 2008 and hadn't learnt my lessons (not for lack of trying, but was reading the wrong stuff). Luckily for me, through my tryst with "observing" the market stress, I had developed a "feel" then for when things were stressed out enough. So after the FB IPO when investors were dumping the stock for fear of user growth saturation and no mobile strategy, I made a ballsy bet by buying FB @$19. Then in the fall of 2012- early 2013, in my search for better investing principles, I found religion (this religion of Value Investing). I read a bunch of stuff, all over the place, but hadn't discovered the BRK letters yet. I read about deep value investing on how one buys assets and not earnings. How one is supposed to invest in at a discount to book value. This stuff made sense to the naive me at that point.(After all how could one go wrong buying 1$ for 50 cents? duh!) I started investing in value based mutual funds, to observe the professionals in action. I kept reading but didn't read the BRK letters yet. Something strange happened and I started worrying about my FB stock. I hadn't applied Value Investing principles and selected it more out of a "gut feel", what if I was wrong? So by April when I was almost sure FB didn't fit into Value Investing philosophy I immediately sold all the stock @$27. I told myself, wow, I got lucky with a 40% return in under 6 months, especially when I had no clue what I was doing. I later made a lot of Value investing bets like AIG, MBI, MSFT etc where I made decent returns and i knew (at least i thought I knew) why I was making money. I met a bunch of big losers too like BBRY, CTCM, ARTW (this list is long). I did VRX too (made a bunch on way up and lost most of the gains on the way down, from about the same buy price point interestingly :)). All these losses though taught me something valuable about the risks I hadn't considered.(when you lose money, you gain experience as WEB recently said in his letter! that is indeed true for me). What the early value investor in me had missed was taking into account melting ice cubes and giving secular growth enough credit. It is dangerous to your health to have half-assed knowledge and interpret the religious teachings narrowly, especially when you don't have the discipline of the great gurus. Percentage wise I think I lost more on VRX on the way down. But I still consider FB my worst mistake. It is one of those things, not error of commission or omission, somewhere in between. Was lucky enough to buy it, didn't have the intellect to do nothing and hold it. As you guys know that particular stock is up 5x from my sell point and more than 6x from my buy point. I haven't had 5 baggers, but this could have been it.... in just 4 years! Alas... (also read as "a loss" which I haven't suffered in any other stock....yet) Just wanted to share this after reading WEB's take on, a person with experience meeting a person with money, in his latest letter. Sometimes something looking good on paper might indeed be your biggest mistake as it could have been great! Never assume you understand any religion because you have read it once. Reading once again might give you a different insight, if you still have a teachable mind. Would be interesting to hear the worst investing mistakes from others on the board and their learnings from it. (only one mistake could be your WORST!) PS: Recently after lot of gut wrenching, stomach churning and fighting my inner demons, I decided to atone for my past sin and made a purchase decision again on FB @$120. Yes this was a very tough decision. The market didn't give me the value it once gave, but there was a small sell off given growth uncertainty and I could convince the still alive market timer in me to go for it. The market might as well be right this time, but I am hoping to beat it by holding it for long and wearing it down! Might not be a 5 bagger anytime soon, just hoping for decent returns this time. Let see... Link to comment Share on other sites More sharing options...
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