THIS POST MAY CONTAIN AFFILIATE LINKS. SEE MY FULL DISCLOSURE FOR DETAILS.
I promised that I would write about my investing mistakes. I suppose it’s time to come clean.
Most of my career involved working at Big 4 accounting firms and large corporate tax departments in the financial services industry. Working for a Wall Street firm was no guarantee that I was proficient at making good investment decisions. The reality is that I was aggressively ambitious in my career and rarely paid attention to the important tenets of investing. Back then, my job required long hours and there were summers that I didn’t see the light of day. Inevitably, every other area of my life was neglected. Getting advice from colleagues was no help either. See my guest post on DistilledDollar.com. I read a few books, but my immature mind and stupid habits managed to squash my investing success.
Consider these blunders:
Betting on the next best thing: Nanotechnology. I thought I was catching an unknown trend in technology. Bye-bye $8,000.
Expecting Quick Results:
HD Home Depot – Bought Sept, 2002: $33.36, Sold in 2006 at $37.50; today $156.00.
AMAT Applied Materials – Bought Oct 2002: $11.91, Sold in 2006 at $17; today $44.00.
Let me state emphatically: I didn’t sell these stocks because I needed the money. I sold them because they weren’t blowing my socks off. Despite a 40% gain, AMAT wasn’t turning me on.
My biggest regret:
My biggest regret in life is not about where I live, my relationships, my career, family matters, or any other critical element of my life. My biggest life regret is not buying and holding Amazon.
Confession about investing in Amazon: I found out about Amazon somewhere during 1997 or 1998. I was in a hair salon and reading GQ magazine. The article stated that a new CEO was planning to turn the book publishing world on its head. Books have played an important part of my life, so you’d think I would have jumped on it. When I mentioned a new internet retailer it to my husband, I wasn’t doing cartwheels, but I was excited about it. He asked what they planned to sell. When I said ‘books’, his reaction wasn’t what I expected. He walked away, grunting flatly, “Ohhh…” From his perspective, books are not sexy. Conversely, my heart palpitates when I enter the library, seeing all the stacks of books that I can read, knowing that they’re free. Still, I reconsidered my enthusiasm and decided against the investment. I began to doubt myself because the internet was still an embryo. It was a stretch of the imagination and I could never be accused of being a visionary. I watched the stock price and read headlines. Because Amazon didn’t turn a profit or pay dividends, the talking heads of Wall Street didn’t give it any credence. To me, ‘no profits’ is equivalent to ‘almost in bankruptcy’. I didn’t understand the growth objectives and ignored the buying opportunities. The years went by. At one time, the stock was between $40 and $50. Which brings me to…
Thinking $4,000 was too much to lose. In relation to my savings back then, maybe it was. However, thinking that a $40 stock was too expensive caused me to lose out on another opportunity to buy Amazon.
In my distilleddollar.com guest post, I explain how I could have cashed in quite handsomely on a stock that I owned – if I hadn’t let my pessimistic brain rule my actions.
Addicted To Work
Part of my ignorance stemmed from the confidence in my job skills and my willingness, back then, to work until I drop. I’ll admit that my career was on the upswing and I was earning a very comfortable salary. That complacency cost me.
My mentality was that I loved working so much, I would never stop. That was ten years ago and, at this stage in the game of life, I’m trying to put an end date on this love affair with being a model employee.
Now, I pay attention to everything and I’m much more disciplined.
I listen to what people talk about. I hope I don’t get caught leaning sideways into anyone’s conversation.
One of my favorite resources is The 100 Best Stocks To Buy in 2017 by Peter Sander and Scott Bobo. If you want to punish yourself, you can read every company’s annual reports, spending hours trying to absorb financial ratios and columns of numbers. I’m an accountant and it makes me zone out.
Instead, you can read robust summaries in The 100 Best Stocks. The authors have created a digest of each company’s activity and financial highlights. In a tidy 3 -4 page snapshot, you will learn about service lines, global reach, and future prospects.
This book has increased my awareness of companies that make the world run. A company called Illinois Tool Works doesn’t warrant exciting headlines like Snapchat and Twilio but I learned that they are a global leader in the manufacture of industrial products. A 3-page analysis provided an adequate analysis.
I use the book to identify industry leaders that pay reliable dividends. When I first flipped through, I was happy to see that I already own a few of the choices like Comcast and AT&T.
Don’t use it as a bible, but as a resource tool. You can always go ahead and pull SEC reports if you want the full-blown disclosure on a company.
This book stays on my coffee table and supplements my other investment resources.