Stansberry Radio Network Blog
Many may have followed along with me, but I hope not too many. I proudly bought ATHome, the only REAL fast internet of its day. Seemed like a great play, internet was booming and faster access... how could you lose? You also got Randolph Hearst III as a free bonus. (Almost like buying a pipeline today) I was "excited" that the broker knew even more about this stock than I did.... and it just continued to climb.... until it didn't....
So it just kept going down down down down. I didn't double down... but I guess the company did. After it was on the way down as I recall, they hooked up with Excite! which was a worthy adversary of Lycos and a few other search engines. These had been going great as well, Yahoo - was the true trendsetter.
What's a trailing stop? Had never heard of one... And well, I rode it all the way to zero if you can believe it. Once it gets to zero there really isn't even a dead cat bounce. To sort of quote Ben Stein "Selling the stock would have been tantamount to admitting a> I didn't know what I was doing and b> I should have probably never bought/owned it in the first place"
Paid up Alliance Member
A chronicle of this (but I didn't get mentioned in the article) was written by Frank Rose, "The $7 Billion Delusion," Wired Magazine, Jan 2002.
So I've spent the last 7 years digging myself out of that hole. Went back to work. So I've paid off nearly all that debt with income from an hourly job. That's a hard lesson to be reminded of every day, every hour that I'm trapped behind a desk. It's one I will never forget. Instead of building up investment capital the last 7 years and putting it to work in a bull market, I've been paying off debts.
Another big takeaway for me is that I should always have dry powder. Because after the crash, I could have picked up DOZENS of nice rental properties in good areas for 2 to 3 times annual rents in Metro Detroit. Seriously. But I had to watch all that slip through my fingers as I dealt with my financial crisis.
That was my biggest mistake(s).
Paid up long armer,
About Me. Male, 33 years old, Alliance Member, I'm an Internet marketer and habitual business starter.
Total portfolio value was around 60K. I came across a stock from someone I knew called YLWPF a phone book company that had a nice looking dividend. Here are the exact trade dates and something I should consider framing to ensure I never repeat the stupidity.
03/29/2011 14:32:10 Bought 871 YLWPF @ 5.635
06/07/2011 09:50:23 Bought 1800 YLWPF @ 3.623
06/29/2011 09:31:22 Bought 4730 YLWPF @ 2.4985
10/28/2011 09:30:00 Bought 22500 YLWPF @ 0.3575
09/13/2012 15:50:56 Sold 5000 YLWPF @ 0.072
09/14/2012 11:31:58 Sold 26000 YLWPF @ 0.072
10/08/2012 13:18:30 Sold 265 YLWPF @ 0.051
10/08/2012 21:52:30 Sold 0.405 YLWPF @ 0.05
During the time I also reinvested the dividends using drip.
What I did wrong
1. Purchased a company without doing do diligence. I did read a single annual report and listened to a conference call but did no comparisons to other companies in the industry. Basically I did not understand the industry or the company.
2. Purchased a company that was no longer relevant. As a young person I already knew the only time I touched a phone book was to pick it up from the front porch to move it to the trash can. This is just like Kodak.
3. I not only double dipped but triple dipped. I dissevered to lose my money
4. I did not have a stop in place
5. I was emotionally tied into the investment
6. I was WAY over allocated funds to this investment. If I was older and had no new income to invest I basically just screwed up my retirement
All The Best,
It is a good thing being stupid on occasion in not a crime otherwise I would have been locked up and the key thrown away.
You wanted the worst investing mistakes every made. Does real estate count?
My wife and I bought a property in Cape Coral, FL in about 1998 for about $10K (sight unseen but it was on a canal and was supposed to get inner coastal access in the future).
We could afford the $10K so made the purchase.
In about 2006 while we were still living in Atlanta we got a call from a resource developer with an offer of $225K for the property.
My wife called around to the various real estate people and the feedback we got was that the property would not go up as dramatically but there was still the expectation of around a 10% gain per year in property values.
You all know where this story is going.
We did not sell and of course after 2008 the property was selling for about what we paid for it.
We could have had our house mortgage paid off and I would have had that money to invest so I figure that was well over a million dollar mistake if one considers the opportunity lost.
My gut told me to sell but I deferred to the information my wife got rather than doing some numbers work and evaluating what could be done with the mortgage payments over time, i.e. investing that amount each month at some nominal/conservative rate and comparing that to keeping the property and evaluating worth based on the numbers given by the real estate folks.
But as usual a bird in the hand…………………..
We sold in 2010 for $20K. Getting back what we had paid in taxes over 12 years and some small appreciation.
Perhaps the second mistake was to have let the property go rather than waiting out the market for real estate in the area. I figured the $225K was so over valued for the property it would be decades before that price would come back if ever. We took the $20K.
Oh well such is life.
Now I tend to sell too soon if I buy a stock like Baidu or NetFlix but I tend not to lose money that way either. Take out your investment in the high flyers once you have 100% gain and then if you want to gamble with the rest so be it.
As always enjoyed the show and thanks for all the information and mayhem as well.
Take care guys.
I can say with the utmost confidence that my greatest investment blunder(s) occurred when I first began investing on my own in 2011.