What is your biggest investment mistakes?

[Liberty]

My biggest mistake was buying convertibles in an oil prospecto yielding 11% at below par right after issuance. I thought I got a cheap option on the low oil price with a very nice coupon attached to it. This was in early '09. Actually going through the financial statements properly and reviewing management's track record didn't occur to me until later. I sold out in September the same year after getting more and more spooked by management behavior. Things I obviously should have noticed much, much earlier. Result? +64%.

 

The company has since raised capital multiple times, changed CEO a couple of times, done a couple of reverse splits and the convertibles were forcibly converted into common stock, diluting the common by 90%. Needless to say the stock is down 99% since '09. Lucky break, heh.

 

Your biggest mistake made you +64%? Not too shabby...

[bookie71]

Don't forget that with compounding, the early mistakes really add up.

[alwaysinvert]

My biggest mistake was buying convertibles in an oil prospecto yielding 11% at below par right after issuance. I thought I got a cheap option on the low oil price with a very nice coupon attached to it. This was in early '09. Actually going through the financial statements properly and reviewing management's track record didn't occur to me until later. I sold out in September the same year after getting more and more spooked by management behavior. Things I obviously should have noticed much, much earlier. Result? +64%.

 

The company has since raised capital multiple times, changed CEO a couple of times, done a couple of reverse splits and the convertibles were forcibly converted into common stock, diluting the common by 90%. Needless to say the stock is down 99% since '09. Lucky break, heh.

 

Your biggest mistake made you +64%? Not too shabby...

Yes, in hindsight I think it's quite clear that was my worst buy decision ever, even though I've obviously owned stocks that performed way worse. Can't count on good sells if I make purchases like that in the future. EV differed wildly from outcome. It happens.

[txlaw]

Interesting thread.

 

Pre-fundamentals oriented investing mistakes:  Buying a bank and an electronics retailer based solely on "value metrics" like P/B and P/E.  And then seeing those go to $0 during the financial crisis.

 

Errors of omission/trading:  Buying WFMI and SBUX near the financial crisis bottom and selling for a quick profit.  And then never getting back in because of my macro worries and their continued march upwards.  I'd be substantially wealthier now if I had just paid attention to fundamentals, not looked at the volatility of the market, and avoided my "trading instincts."

 

BBRY:  While I still believe in the sum of the parts being higher than my cost basis in my latest tranche of BBRY shares (I think my assessment of BBRY's assets is sound), I made several errors when investing in BBRY over the last two years.  I didn't bake enough of a discount into what value I could realize as an OPMI based on a distress situation and possible fire sale.  I didn't pay enough attention to the risk of OPMIs not necessarily getting even liquidation/run-off/break-up IV due to control investor involvement and management financial incentives (the FBK lesson?).  I overestimated the reconstituted board's (and Prem Watsa's) ability to prevent poor decision making by management and to make necessary cultural changes to preserve and maximize value.  I assumed that awareness of the necessity of preserving resource value (for "highest and best use" resource conversion) would trump the inertia of strategic plans already put in place.

 

And probably more mistakes as well.  I will definitely be doing a post-mortem on my BBRY investment after everything is said and done and maybe even sharing with the board. 

[ERICOPOLY]

Not waiting until today to unload SHLD.

[krazeenyc]

Not waiting until today to unload SHLD.

 

LOL ERIC :D

[plato1976]

:) is today THE day to unload ?

 

Not waiting until today to unload SHLD.

[ERICOPOLY]

:) is today THE day to unload ?

 

Not waiting until today to unload SHLD.

 

I'm not calling the top (it's obviously not in my skill set) but I would certainly be gone today.  So anything after this point I can stop being annoyed by this stock.

[treasurehunt]

My biggest mistake was buying convertibles in an oil prospecto yielding 11% at below par right after issuance. I thought I got a cheap option on the low oil price with a very nice coupon attached to it. This was in early '09. Actually going through the financial statements properly and reviewing management's track record didn't occur to me until later. I sold out in September the same year after getting more and more spooked by management behavior. Things I obviously should have noticed much, much earlier. Result? +64%.

 

The company has since raised capital multiple times, changed CEO a couple of times, done a couple of reverse splits and the convertibles were forcibly converted into common stock, diluting the common by 90%. Needless to say the stock is down 99% since '09. Lucky break, heh.

 

Great post, alwaysinvert. A couple of my biggest mistakes made me money as well, through sheer luck (for instance, one company went bankrupt within two years of my selling out at a profit). There are many good stories in this thread but there also a few that basically boil down to "I bought stock XYZ and later it went down a lot." I don't think that this says much about whether the initial decision was a bad mistake or not. So I find your post especially valuable. Thanks.

[JBird]

There are many good stories in this thread but there also a few that basically boil down to "I bought stock XYZ and later it went down a lot." I don't think that this says much about whether the initial decision was a bad mistake or not.

 

+1

[phil_Buffett]

my biggest mistake was Blackberry.

 

my first buy was last year when the stock was around 6$ almost at the low. i saw the Company not dead yet and allot of good assets, prem in it and so on. i bought a Little stake, make good Money on it. my first mistake was that i take the trading mentality. normally i have the value Approach, great bargains, longer term Holding period. but this time it was the wrong side. the fact that you earn a lot of Money in short time was the devil. i sold it after very short time with around 40% gain. then i didnt follow it closer and the rise in Blackberry stock goes on, i was angry that i sold to early. after studying it closely i decided to go back and invest in it again, i think this was in the end of December 2012 last year when the Shares Drops after bad earnings. i bought a lot of Shares, especially because of the release of the new smartphones in end of Januar i was very optimistic. and i saw still a lot of value in it. the stock rises very much thereafter in Januar and i sold short before the Launch date for a 40% gain in one month.  this was all great, big gains in very short time. but then the Errors beginn. i bought a Little stake back before the Launch (too much greed) then as everybody knows the Launch was terrible, i was in the red, bought more and more Shares. the rollercoster begin stock up and up and stock down and down. i put more and more Money into it,. i was so blind of to much greed. read the prem watsa comments especially the fair value of 40$ in a few years and so on, thousands of articles why Blackberry is so good and so on, have the Feeling that this Thing will double in a year. but then after the downtrend begin with bad Marketing ( i hated how they doing Marketing) the bad earnings, the false promises from Thorsten heins (that he will sell tens of millíons of q10) i realize that it was a big mistake ever to invest in such a Company. with this competitors Samsung and apple and lot of other Players. Blackberry was a good Company, great assets, great Chat, great patents, great engineers. but they do all steps wrong. all steps!  i trusted also too much on the words of prem watsa and chou for example. that the patents alone would be worth 13$. i was to greedy and then i sold my stake around 8,5$ with a 40% loss.

 

the end of this mistake is, i made Money altough i have a 40% loss. i made 40% two times (80% gain combined) and then i lost 40%. so i have still 40% more Money. but it was terrible. i make an Investment what i never would do again. in such a specific Branche and terrible Situation. my lesson is that i never buy such a Company again, and only buy things that i can hold longer term and sleep well at night. too much greed is very dangerous.

[skanjete]

One of my biggest mistakes (plural, I have a collection) was one of stinginess.

 

Back in the first quarter of 2009 I was steadily buying some incredibly cheap stocks. One stock was quoted at a P/E of about 1. However, my first investment in the security was made at a P/E of about 4,5 in the first half of 2008 and although I thought I had a margin of safety, the stock went lower and lower. So during the slide, I did some extra purchases.

At a certain point, I put an order in the market to buy an extra amount that would have augmented my position with 50%. The market price was at about 61 at that point and I put in a limit order to buy it at about 60,5 for a nice prospective P/E of 1). With the daily volatility, I was certain that the order would be filled, but alas the opposite happened. The order never got filled.

 

In the 2 years that followed, the stock multiplied by about 30 for a cool annualised return of more than 500%/y! Of course, I had a good investment with the established position, and the cash got invested in interesting other situations, but the cost of this lost opportunity is quite huge after some years.

[gjangal]

I started out in 2010. My biggest overall mistake in investing was aimlessly buying and selling stocks, ETFs, ETNs mostly by reading analysis on Seeking alpha, motley fool , blogs and the like. I was moving in and out of stocks in a matter of weeks, months. I wasn't buying businesses, I was buying pieces of electronic paper,  the exact opposite of what Graham and Buffett ask investors to treat stocks as.

 

Finally in 2011, frustrated with no performance I read some books like Intelligent Investor, Pat Dorsey's book on moats. Warren Buffet's letters to shareholders and I am beginning to appreciate the concepts of earning power, moats and ROIC.

 

In terms of mistakes I came close to losing permanent capital. I once put 15K in a chinese packaging company called BEST(Shiner international)  without understanding anything about the business.

[rkbabang]

I first started investing in 1996 after graduating from college and from '96 to 2000 I invested mainly in tech stocks, Cisco, Texas Instruments, AMCC, ADI, etc, etc,.  I made a lot, then I lost most of it.  Since then my biggest "mistakes" have all been selling way too early.  I seem to do this again and again.  Some examples:

 

I held MIDD with a cost basis of about $8.  Most of it got called away at $80, because I wrote a covered call, and I didn't buy it back.  I was waiting for it to go under $80 again and it didn't.

 

I had Netflix with a cost basis of $11 and sold it around $60.

 

Then also with Netflix, I had a small amount of Jan 2014 calls that I sold for about breakeven and they would have been worth 6X only a month later, and they are worth many times more today.

 

I bought SAM in the $20s and sold around $115.

 

These are just the ones I can think of off the top of my head, there are many more.

 

[Ham Hockers]

Two worst ones:

 

There's a company that I understand about as well as you possibly could, and I didn't buy shares when it traded below cash during the crisis. No debt, assets falling in value but still worth some non-zero amount. Could have made several times my money.

 

Most frustrating was probably K-Swiss. Learned to never bet on a jockey if he's riding a run-down horse. And then I really got a kick in the groin when he sold the company AFTER I'd liquidated my shares.

[Guest longinvestor]

I started out in 2010. My biggest overall mistake in investing was aimlessly buying and selling stocks, ETFs, ETNs mostly by reading analysis on Seeking alpha, motley fool , blogs and the like. I was moving in and out of stocks in a matter of weeks, months. I wasn't buying businesses, I was buying pieces of electronic paper,  the exact opposite of what Graham and Buffett ask investors to treat stocks as.

 

Finally in 2011, frustrated with no performance I read some books like Intelligent Investor, Pat Dorsey's book on moats. Warren Buffet's letters to shareholders and I am beginning to appreciate the concepts of earning power, moats and ROIC.

 

In terms of mistakes I came close to losing permanent capital. I once put 15K in a chinese packaging company called BEST(Shiner international)  without understanding anything about the business.

 

Your thoughts exactly describe my behavior before reading the superinvestors, notably Buffett/Munger.

Yes Sir, aimless buying & selling it was. Now, I don't make that mistake anymore. I look back my trading history since 2008 and is a total of 11. These trades have had one theme, concentration in my favourite stock of all, BRK.

[Guest Qu1nt3ss0n]

Biggest mistake was in my 20s - my very first investment/speculation, a stock called Aabar Petroleum in the Abu Dhabi Stock Exchange. A very speculative oil service stock, doubled my investment in a matter of weeks then got out. When it went back down again I went all in this time but it never got back up. Then news came out that their changing their name from Aabar Petroleum to Aabar Investments at which point they started going on an acquisition spree, bought a bank in malaysia, and several property businesses. Then an enterprising member of the ruling family, I think his name was Sheikh Mansour became majority shareholder (seemingly overnight) and decided to take the company private in a manner that would make Michael Dell look like a saint.

 

I lost about 2yrs worth of salary and bonuses. I also took a 100% loan against my annual salary so had to pay that off too. 

 

Greatest investment lesson ever! I obviously knew nothing at the time. But its the one thing that set me on the path of education...... So then again, maybe this is my greatest investment! :)

[SharperDingaan]

Poseidon Concepts. Jan-Feb 2013.

 

They delivered/erected/managed/broke-down/removed the on-site tanks holding fracking fluid for use in horizontal drilling. Good & simple technology, real function/need (fluid freezes at -20), established customers, strong demand, & a sub that was a spin-off from a bigger company. We bought it because we rushed our fences, had cash to deploy, they had just had an earnings miss (collapsing their share price), & fracking is well within our circle of competence. Should have been like shooting ducks in a barrel .....

 

Problem was the coy was a fraud, & it went into receivership shortly after the fraud was discovered. The spin-off was at the expense of competent accounting staff & functioning controls, & the take-or-pay contracts were not quite as interpreted. Add to it that we favor concentrated positions ... & the loss hurt (both us, & our 25% tax-man partner!).

 

Lessons learned: Even if your process is reasonable OK, shite can still happen. Don't rush your fences, & pay up for quality; making that extra $ is a lot easier, & a lot more reliable.

 

SD

 

[gary17]

Some of you know this already, but it's RIM. 

 

My portfolio was up 40% this year around Feb (when RIM touched 17)

 

Then down 40% or so after the earnings in June -

 

Thanks to ideas on this board, and IRE (thx Prem!), i am back to roughly 0% for this year.....  I would say what a roller coaster ride but I'm sure many would say I haven't seen nothing yet...

 

The RIM investment has an awesome twist to it though - because I had made some money before the earnings and I was about to buy an engagement ring, I had to sell some RIM shares....  and through the jeweller in Taiwan, I got to know her husband, who introduced me to his friend, who introduced me to this board  (I'm serious!)    Prior to that I had assume no other value investor existed LOL       

 

 

 

[Dustin T]

Buying General Maritime GMR in Feb of 2009. I was smart enough to know I need to add some money into a down market, virtually any investment made at that time did. Not mine, I invested in a shipping company (owner operated)  that paid a huge dividend in an industry heavy on supply and low on demand. They had just bought more tankers at rock bottom rates and I thought once things turned around they would be flush once more. I sold prior to their bankruptcy wiser and poorer.

 

I did learn lessons. Shipping is outside my circle of competance. I avoid leveraged companies unless the revenue streams are very predicatable and well understood. and lastly the owner-operator was still chairman but he had hired a CEO and was running a second shipping company. He had recouped all of his investments in GMR via dividends and poured them into his new ventures and was actively running them. My money wasn't in his "baby" but in his worn out old workhorse that he had already put out to pasture.

 

A few months ago I read "The shipping man" and it pretty accurately reflected my experience in the industry.

 

 

[Partner24]

The RIM investment has an awesome twist to it though - because I had made some money before the earnings and I was about to buy an engagement ring, I had to sell some RIM shares....  and through the jeweller in Taiwan, I got to know her husband, who introduced me to his friend, who introduced me to this board  (I'm serious!)    Prior to that I had assume no other value investor existed LOL     

 

That's a very funny situation. I guess you are happy to have met that jewelrer!  :)

[CorpRaider]

Two words:  Lucent Technologies. 

[frommi]

One of my biggest mistakes was daytrading from 2003-2007. Lost around 2-3 years of expenses. I traded everything, futures, options, KO certificates, CFDs.

I had a lucky start with some good runs, but lost all of it soon after and some more in the next years. It was like casino gambling, i think i made some banksters rich.  ;D

[mysticdrew]

Loading up on LEH  :'(