We came across Brian Feroldi‘s post regarding the 10 biggest investing mistakes he had/have in his investing career and we could relate that to our own trading and investing journey. Read through this and find out how can you relate it to your investing career so for.
- Only looking at the share price
I bought penny stocks at the start
My logic: 100 shares of $1 stock > 1 share of $100 stock
The price of 1 share is meaningless!
What matters is how great the company is!
- Only looking at dividend yield
I bought stocks with 10%+ yields
My logic: 10% yield > 1% yield
The dividend got cut and the share price dropped — a double-whammy!
A high yield is Wall Street’s way of saying “this yield is not sustainable, watch out”
- Selling a great stock early
I bought $DXCM in 2007 for ~$6
I sold it 1 month later after a 15% gain
Current price: $412.58
I was in a rush to take profits, so I missed out on HUGE upside
If the opportunity is huge, hold!
- Not buying a great stock due to valuation
I’ve made this mistake over and over again
I didn’t buy $ZM at $80 because the valuation was “insane”
Current price: $455
If you like everything about the company except the valuation, but some
Even if it’s just a little bit
- Buying too much of a “sure thing”
I thought $KMI was a SURE THING in 2014
I made it my largest position at $35
$KMI fell 70% in 2015, Yes 70%!!!!!!
Lesson: Cap your exposure, NO MATTER YOUR CONVICTION, and let your portfolio concentrate itself
- Only looking at P/E ratio
I use to apply the P/E ratio to ALL stocks
I didn’t buy $CRM in 2005 at $5 cause its P/E ratio was >100
Current price: $240
Lesson: P/E ratio only works on stocks that are OPTIMIZED FOR EARNINGS
Don’t use it on companies in phase 1, 2, 4, 5
- Thinking “I Missed It”
Great companies can win for years and years and years!
I haven’t bought lots of great stocks because I thought the good times were over
If it’s a great company, you can get in late, and still win big
- Comparing myself to other investors
I have a bad habit of comparing myself against other successful investors
but, if other investors are doing better than me, SO WHAT?? That doesn’t matter!
What matters is how I am doing compared to my goals!
Comparison is the thief of joy
- Not listening to people I trust
I have ignored buy recommendations on $SHOP, $NFLX, $NVDA, $ZM, $MTCH, $IDXX, $TWLO, $ADBE
Even though they were recommended by @DavidGFool @TomGardnerFool and @FoolJeffFischer
All of whom are much better investors than me!
- Repeating the same mistakes
I have a habit of learning investments lessons the hard way AND slowly
I can all but guarantee that I’ll repeat some of these mistakes again (especially the “not buying on high valuation” mistake)
What can I say – I’m human