Author Topic: Amusing bad investment moves  (Read 8743 times)

DoubleDown

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Amusing bad investment moves
« on: January 25, 2013, 09:56:51 AM »
My recent post on my poor, poor advice to my friend not to buy AAPL 13 years ago just made me wonder if anyone cares to share funny regrets about investments we made or didn't make, or other missed opportunities. I don't really have "regrets" since I'm an optimist, but here are a few amusing stories of mine, or of people I know, that could have gone very differently!

1. Having recently graduated from college, I had a long conversation with a business partner in early 1995, where we were debating investing in this new "internet" company called Netscape, and also a promising bio-engineering firm called Amgen. We ended up investing in neither. I also opted not to invest in AOL in late 1994, though I had given it strong consideration. I don't know how many hundreds of thousands of dollars would have come from what would have been a tiny investment back then.

2. A friend of mine was about to sell his tech company just before the dot-com bust. He was literally one day away from signing the paperwork, and was at the Porsche dealership test driving the car he was going to buy with part of the net $13 million he was going to get out of the deal. He got a call from his partner while he was at the dealership. The partner said, "Stop everything, something's happened..." The dot-com bust started that day, the deal was canceled, and he continues to work for the man...

3. Another friend had $700k in stock options similarly wiped out when their dot-com company stock went from $65/share to $.02/share, then the company folded. I think they were about 2 months from being vested, and could not sell prior to the crash.

jpo

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Re: Amusing bad investment moves
« Reply #1 on: January 25, 2013, 10:13:53 AM »
When I opened my Roth in early 2010, I let the money sit in cash for 10 months. Missed a good run-up.

A few poor stock choices (GNI) that lost money and never recovered has pushed me towards a greater allocation to index funds.

Khan

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Re: Amusing bad investment moves
« Reply #2 on: January 25, 2013, 11:03:40 AM »
I missed getting into BAC when it hit 5$ a share(I was watching it), and when it got above 5$ a share I held back from buying, missing a great runup and at least 2$ a share in profits(I think I ended up entering just shy of 8$ a share).

I got back from a deployment in ~July of 2009, and with all my deployment money, I maxed my Roth IRA for that year(with a 7 year CD... psh, at least it's @ 3.78%) and put something like 12k into a stock account, this was my first foray into investing. Unfortunately, I didn't know anything at the time and had no idea there was blood in the streets, and I put it all into SPY, if I hadn't done that and had done some research at the time, any number of investments could have done much better then what I did get.

Not investing, but I bought a 2012 Mustang GT, drove it for 11 months, and sold it 2 months ago because I realized it didn't match my personal value/dollar ratio, so in total I lost 20k in that experiment.

matt_g

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Re: Amusing bad investment moves
« Reply #3 on: January 25, 2013, 11:23:13 AM »
I signed up for whole life insurance, only to cancel it 1 year later.  I didn't get any money back and lost $20k.   I didn't even get to drive around a mustang for 11 months.

gecko10x

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Re: Amusing bad investment moves
« Reply #4 on: January 25, 2013, 11:30:12 AM »
A number of years ago I owned 90+ shares of AAPL which I sold for around $3,000 (I "needed the money" at the time). That's my $40k+ "Oops!"

TLV

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Re: Amusing bad investment moves
« Reply #5 on: January 25, 2013, 12:23:40 PM »
I've experimented a half dozen times with selling covered calls on positions I don't expect to go anywhere in the short term. I always set the strike price somewhere from 10-30% up from the current level (high enough that I'd be willing to sell at those levels), and only a month or two out.

So far, every single time I've done that the stock has bounced 10% or more higher than the strike price and it's been assigned. The worst was Nokia - I sold Jan 19th calls with a strike of $4 when it was selling for $3.25ish in early December. Two days later it shot up to $3.88, and it was around $4.70 when assigned. Still a nice gain, but it could have been so much higher...

I keep telling myself that I was better off with the covered call because I would have either sold around the same level anyway (without the possible income from selling the call), or I would have held on too long and it would have dropped again before I sold (a quick drop happened in about half the cases). It's pretty clear at this point that I should just stick to holding index funds (and I'm very glad that I never sold naked calls...)


norvilion

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Re: Amusing bad investment moves
« Reply #6 on: January 25, 2013, 12:34:54 PM »
Can't say it was a bad investment move since I did absolutely no research, but back in high school (probably 2003 or so) we did a fake stock investment type-thing for economics class, with the person who had the most money in their fake account getting a gift card. Somehow I managed to double my money in 6 weeks, and never did end up actually investing any in one of the companies that had helped contribute to that. These days the main one sells for about 30x what it did back then.

It would have been fairly foolish to actually haphazardly invest like that, but still amusing to look back on.

sol

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Re: Amusing bad investment moves
« Reply #7 on: January 25, 2013, 01:50:43 PM »
I bought a house well before the local market had bottomed.  Had I waited another year I'd be almost 100k richer.

kisserofsinners

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Re: Amusing bad investment moves
« Reply #8 on: January 25, 2013, 03:13:15 PM »
I like to laugh at my mistakes. I've had a couple doozies...

1) During the dotcom bubble i was working more or less as office eye candy for a lesbian/trans owned flat panel company. When we went public i poured 30% of my income for several pay periods to buy in. I was forbidden from selling it until after the bust and the companies eventual collapse.

**Little recovery** Thankfully i stayed tight with my boss, still do. She called me randomly several years later and for no reason at all the price bumped a little and i was able to recover some funds. \o/ I also learned it's really complicated doing your taxes after that and i ended up paying income tax on my loss!!! Grrrr.

2) After being encouraged from my boyfriend i got back into the came. He'd tell me what to buy and i'd buy it. He'd tell me what to sell and i'd sell. The trouble there is i'm still clueless. We broke up and i spilled something smearing the documents he left me with. This time i learned how to do my taxes at least.

3) ...and now for some good news. I started my job at the very end of 2008. It was a decent increase in pay due to lower benefit costs. I took the opportunity to dump money into my 401k here before i got used to the money. I got 23% returns that first year. Dumb luck, but i'll take it.

smedleyb

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Re: Amusing bad investment moves
« Reply #9 on: January 25, 2013, 03:46:33 PM »
Mistakes?  Where do I start:

(a) I bought a home thinking it was an investment.  Still trying to right the financial damage this has done to the size of my investment kitty.

(b) I bought 1000 shares of data software company Legato at $60.  On margin.  The stock was down another couple of bucks  a few days later, on the eve of earnings.  So Gordon Gekko here doubled down.  Now, you may ask, "who's this Legato?"  Exactly.  That earnings report was the beginning of the end for the company.  The next day it opened down 50%, at which point I sold.  (I think it eventually went bankrupt.  But I really don't know, or care).   

(c) in late 2006 I attempted to persuade anyone who would listen that financial crisis was immanent.  I cashed out all my accounts (the IRA's too, kept a few things) and went into hunker down mode.  By March 2009, at the nadir of the crisis, I had begun to accumulate at S&P 680 some stocks -- GE and Citibank -- which represented about 5% of my investment stache.  My plan was to scale down and up the size of the purchases every 20 S&P points, so at SPX 660 commit 10%, at SPX 640 commit 15%, etc, so that by SPX 580 I would be fully invested (I actually though the S&P would reach 500 by the end of the month, but I didn't want to be greedy).  But alas, those initial purchases were all I got in, I watched the market rally 50% into the summer of 2009, and then I proceeded to sell my scant longs and short the market week after week through the fall and winter of 2009.   I gave back some great gains in Citigroup (less so in GE) and lost another 10% off my account to boot.   I was literally depressed for a year because of this.

I've clawed back to flat in the meantime, and moved most of my money over to Vanguard (in 2011) with the intention of "putting it to work" after the current cyclical bull runs its course and the market pulls back 25% (it's my honest plan for the next 5 years).  And if the market runs from here to Dow 30,000 and I'm all cash the entire way this will obviously be the next installment (d) on the list.

.

 

 

Fuyu

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Re: Amusing bad investment moves
« Reply #10 on: January 25, 2013, 06:32:47 PM »
Selling all my dividend stock to buy Apple stock when it first dropped to its lowest in 11 months. Bah.

iamlindoro

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Re: Amusing bad investment moves
« Reply #11 on: January 25, 2013, 06:38:17 PM »
Selling all my dividend stock to buy Apple stock when it first dropped to its lowest in 11 months. Bah.

Tough to tell if that's a bad move or not yet.

Fuyu

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Re: Amusing bad investment moves
« Reply #12 on: January 25, 2013, 06:45:09 PM »
I'm a little worried that I'm not worrying. If anyone with experience buying stocks would mind giving their opinion, should I feel worried when a stock goes down by more than 10%? I wouldn't invest any money that I would need in the short term like a year and I save on average 40-45% of my income each month so I feel like even if it goes down to $100/share it's okay. Is that a really bad way to think about it?

James

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Re: Amusing bad investment moves
« Reply #13 on: January 25, 2013, 07:22:12 PM »
I purchased my current house in 2008, and in doing the math I am confident it's been at least a $250,000 loss compared with staying in the house I had before the purchase.  It's very possible that will increase by another $50,000 before I actually get out of the house.  Without MMM I'd be in much more pain, I've managed to keep my head above water by dramatically cutting spending over the last 18 months, plowing much of my salary into paying off debt and paying down the mortgage.


I had a conversation with my dad shortly after Apple hit $150, talking about all the cash they had and the success they would probably have as the economy came back.  Amazingly they have had success beyond expectations despite the extremely sluggish economy. At the time I simply didn't have enough freedom with my investment assets to make a move like that, I had just purchased a $450,000 house with 7% down...  :D

kendallf

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Re: Amusing bad investment moves
« Reply #14 on: January 25, 2013, 07:54:00 PM »
I'm in the "stupid real estate purchases" camp.  Bought my house in 1995 for $69k, horrendous interest rate, refinanced a couple of times..  the paper "value" kept going up. 

Fast forward to 2006; I decided I could afford a big plot of land out in the sticks and bought 10 acres, refinancing my house and taking cash out to pay debts and put $30k down on a $130k lot.  I was going to wait a couple of years and sell my current house, build my dream house and shop out in the woods...

Yeah, not so much.  I'm easily $70k in the red on the house and (still unbuilt) property; I can't sell either one and I'm paying a HOA fee on the property even after the developer went bankrupt, which really irks me. 

Started reading MMM a couple of months ago; I was trending generally toward being more frugal but I've had a serious change in mindset thanks to the Stache.  We just bought a $35k house (with 401k money), I'm doing some renovation and we'll move there this summer and rent out the old place.  I hope to cover most of the mortgage there and make the best of a bad situation.

projekt

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Re: Amusing bad investment moves
« Reply #15 on: January 28, 2013, 03:57:07 PM »

marz1982

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Re: Amusing bad investment moves
« Reply #16 on: January 30, 2013, 12:43:35 AM »
Ahaha, I have one of those.... Taking a hot "tip" from a knowledgeable accountant that was giving employees at our company a personal money management course, I pulled out of some very standard, solid company shares and bought shares for a mining company extracting Uranium (Uranium One).  The company had apparently just signed on several mines, and their predicted income for the next few years was sky high!  The accountant was predicting the price of Uranium would soon soar as countries started looking at alternative fuel sources.

I bought in at the very height of the "Uranium fever", a few months later the company discovered the mine wasn't as productive as they estimated it would be, profits were abysmal, they lost a deal or two, and suddenly became the dog of the stock market.  This might have coincided with the 2008 crash...  The shares dropped from South Africa Rand 73 to R18....  I lost about R30k on that bet, that's about a month's very good salary lost.

Held on for several years hoping it would recover, never really did so I eventually counted my losses and sold it for what I could get.  I look back on it as a very expensive lesson on what not to do :)

strider3700

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Re: Amusing bad investment moves
« Reply #17 on: January 30, 2013, 01:28:47 AM »
Brand new crotch rocket with 8km on it when I took it off of the lot. They even brought it in for me because they didn't have the color I wanted.   1 year and 8xxx km later sold it for 50%. 
awful "sports car" that I had to tow home it was in such rough shape.  $6000 later it ran and looked not awful.  sold it for $100 more then I paid...

not so bad - sold a house in a bad location for double what I paid just before some thing happened in the area that made selling almost impossible. Took the profit and bought a much better house in a different location for 50% more then the old one sold for.  Both sale and purchase happened at the top of the market, I'm sure we've lost at least 10-15% from what we paid now and I expect it to get worse.  We're not close to underwater though and don't expect things to get that bad. At this point had we sat on the cash and rented we'd be about equal in lost rent vs lost value in the house. 

Other fun interesting things I missed.   I was in compsci at university in the late 90's.  First saw apple OS X in 99/2000?  thought that's cool that they're using BSD but who would ever pay that much money for a computer...  Played with a beta of google about 98 early 99 and thought nice but you can't make money off of that.  wrote web pages and little online games in 96 and thought fun, but the only thing that ever sells online is porn,   First introduced to the internet in 94 and thought hmm there's nothing here, gopher search isn't anywhere near as good as a bbs search and there's way more games and people on the bbs.    In 97 I had some buddy's working for the local ISP. one of those banks of 56k modem shops.  I thought that place had it made.  Amazing office, owners walked around in sandles looking half stoned coming in an 2pm and leaving by 4 in their new porche. Lady in charged dropped 150k on decorations for the lobby... place was bankrupt and closed in 2000.  the big guys didn't even bother buying them up to get the customer base.  Cable came in and it was game over within 2 months. 

The few companies I did think about investing in but never bothered to do so(because I'm lazy not gifted with foresight) involved things like making laser retinal displays and obscure CPU lines that dead ended a decade ago oh and solar panels.  Those things were like gold and any company that had patents and factories to build them was the same as printing money...

But really my worst investment move I've ever made was just tonight making my first non cash in a savings account investment. I'll turn 36 in a few weeks.  I've had enough money I could have invested 5 years ago. If I had buckled down I could have done it 13 years ago.

Also I very clearly remember 12 years ago spending a day off work in Vancouver hanging out with a friend,  going to the fair, having a few beer, watching a movie.  On the ferry back home I was sitting there doing the math in my head and came to the conclusion that if I had a house I owned outright and had 230,000 in the bank earning 5% yearly I would never have to work again and could just live off of that 5% (inflation never occurred to me)  I figured I needed $400,000 to buy a house and save that much up.  Saving that much money would take decades in my 24 year old mind so it wasn't even worth thinking about.  Had I take the idea and worked at it I'd easily have that much money in the bank now. 

ErikZ

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Re: Amusing bad investment moves
« Reply #18 on: January 30, 2013, 08:57:46 AM »
Laser retinal displays? I haven't heard of an actual product being made, I thought it was still in development.

And it's really interesting to see what people have had problems with, and worked their way through it.

strider3700

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Re: Amusing bad investment moves
« Reply #19 on: January 30, 2013, 09:42:56 AM »
Laser retinal displays? I haven't heard of an actual product being made, I thought it was still in development.

It has been for at least 14 years now..   I thought I read that they had prototypes in place with the US air force for pilots to use back in 2000.   Wish I remember the company name.


<edit>Found it  http://www.google.com/finance?q=NASDAQ%3AMVIS&ed=us&ei=PUoJUZjXCu_LiQK1Nw   </edit>   and this ladies and gentlemen is why I don't cherry pick stocks....  I liked it somewhere around the $200 mark...
« Last Edit: January 30, 2013, 09:46:43 AM by strider3700 »

DoubleDown

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Re: Amusing bad investment moves
« Reply #20 on: February 01, 2013, 02:04:44 PM »
And if the market runs from here to Dow 30,000 and I'm all cash the entire way this will obviously be the next installment (d) on the list.


That's hilarious. For your sake I hope there's no (d), although I wouldn't mind seeing a Dow 30,000!

Jamesqf

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Re: Amusing bad investment moves
« Reply #21 on: February 01, 2013, 04:32:47 PM »
Laser retinal displays? I haven't heard of an actual product being made, I thought it was still in development.

Hasn't the retina display been one of Apple's big things the last year or so?

velocistar237

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Re: Amusing bad investment moves
« Reply #22 on: February 01, 2013, 06:29:36 PM »
1) Had all my money in my checking account until one day I decided I should put it all in VFINX. In 2007.

2) Signed a purchase and sale and put down a $1K deposit on a house before deciding it was a bad idea and pulled out.

3) Moved a 401k from a previous employer to Vanguard. It took a few weeks to go through, and in the meantime, the market went up. Then it went back down, and I didn't get around to it. It's still in a money market account, and it missed a 10% market increase.

grantmeaname

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Re: Amusing bad investment moves
« Reply #23 on: February 02, 2013, 06:59:05 AM »
Laser retinal displays? I haven't heard of an actual product being made, I thought it was still in development.
Hasn't the retina display been one of Apple's big things the last year or so?
Marketing neologisms!=Technological advances