Lessons Learnt from Stupid Mistake - Share Yours

Come on, share your experience here.

I would share mine first, don't know anybody would be interested or not ?
Since this is a value investing forum , I guess not many would be as stupid as me.

First one being the most classic one !
It's amazing that I still remain solvant after so many stupid mistakes !

Chartered Semicon


Buy
$7.00 dtd 1-Nov-00, 1 lot
$6.30 dtd Jun-01, 1 lot
$2.86 dtd 30-Jul-02, 1 lot
$3.02 dtd 5-Aug-02, 1 lot
$2.65 dtd 6-Aug-02, 1 lot
gave up when stock eventually tank at
Dec-02 to about $0.60

Another classical example of buying at the top.
When CSM falls like a dropping knife in early 2000, from
US$10.00 to the level around $7.00 , that is where I
was trapped.
Average all the way down until gave up !

SELL
$1.44 dtd 27-Mar-06
Finally take the great pain to sell everything.
Sell it while it is still at the top of a small cycle, and while the US
broker is still holding on the BUY call.
The MACD chart is showing that the stock is going to head down soon.
The bigger worry is it incurred losses S$709m in 2002, S$484m in 2003,
S$270m in 2005. What's next ?
When will be the next Cash Call, or Placement ?
Loss incurred : $14,833


Note after selling : ( written on 2006 )
Chartered is a super high CAPEX coy which required to pump in S$500m
in high tech equipmt every year in order to stay competitive in the market.
At present they are running at 90% capacity just to break even with a tiny profit,
what if market weaken again and the capacity drop back to 50 ~60% just like
year 2003 ?
Don't chase a crazy bull, or a crazy rebound. If you do chase, be very careful !!!!
Follow up on Chartered :
Chartered has officially received a take-over offer by Advanced Technology Investment Company (ATIC) at S$2.68/share,
representing an equity value of S$2.5b while major shareholder Temasek Holdings which has a 62.3% stake has also signed
an irrevocable undertaking to vote in support of the acquisition.
Taking into the account of the 10 into 1 share consolidation in 30-Apr-09, the take over price would be S$0.268 pre-consolidated price.
So my selling price of S$1.44 is 5.37 times the takeover price . ( S$1.44 / 0.268 = 5.37 )
S$1.44- S$0.268 = S$1.172 difference. S$1.172 x 8000 = S$9,376
So I have saved myself from losing another S$9,376 by chopping off the rotten arms !

My reflection now :
1. Never catch a falling knife.
2. Never, never, average down.
3. Cut loss, when you realized that it's a gone case. No matter how heavy is the loss will be.

On a second thought :
It could be my risk assessment about the company that cost me.
I mean what can go wrong in a company that is in the STI Index (then) ?
and it's a flagship Tech coy under the Temasek fleet, what can go wrong ?
And the analysts keeping emphasize the loss in the coy is due to cyclical or seasonal reason, and it will turn around in the next cycle.
( Actually a very good excuse to smoke the dumb investor like myself. )

Nice a good place to log my past errors in investing. Here is mine:

1. Renewable Energy Asia

Bought 40 lots at 0.20 in March 2011.
Price went down in May and I thought why not since it is cheaper
Bought 50 lots at 0.11 in May.
Got internship pay and thought could invest in REA even more since cheaper bought another 40 at 0.09 in June.

Realised cheap can be cheaper and sold all out at Oct 2011 at 0.053-0.052. Lost about 10k.

Lesson:
1) Nvr follow/ rely on brokerage optimistic reports esp from PXXXXXX, this applies to all brokerages.
2) Read FS, BS, Cashflow. Importantly, do your own research.

2. Eratat (cant rmb the time I bought)
Read on a forum, how good eratat was.
Bough 65 lots at 0.137
Sold in Feb 2012 in class at 0.131 (sorry prof I was not listening in class :p)

Lesson: Forum's recommendation may be of good intention but please do your own research and analysis on the industry/company.

Side note: From this 2 lessons and a feel minor ones. I decided to "freeze" my POEMS/ Citibank acc and start afresh with a new perspective in investing. In May 2012, I signed up with SC, focused on value investing and swore not to follow the brokers recommendation. That's when I chanced upon VB.

FYI, if any1 is interested in my history. I started my journey on the market in Aug 2010. First stocks were Keppel, SMRT and Sunvic

Relax. Relax.

Even WB lost money sometimes yet he is the most successful investor UTD. So are many current Great Investors/Traders.

And yes, i think none of the financial book authors recommend Pyramid Down. Because if you are wrong, you will most probably wipe out.
i think it's O.K. provided you limit your pyramid down with a "limit" and as many different stocks in different sectors as deem fit.
Another words, whatever you do, do limit and diversify.
There is no 100% sure thing in investment.

Me?
Of course, nobody will believe the stupid mistakes i had make even i have knowledge from my reading. (aka some are just too shameful to mention that i can't let anyone except my wife knows.)

Nothing teach you better then when your ass have been burned by the fire from the market.
Human beings are actually psychological irrational at times when come to financial matters.
And i think none of us can escape.
Don't think so?
Never committed stupid financial mistakes?
Wah! You better than WB and all the GREAT INVESTORS????
My 2 cents (commonsense).
Shalom.

(15-02-2014, 08:47 AM)CY09 Wrote: Nice a good place to log my past errors in investing. Here is mine:

1. Renewable Energy Asia

Bought 40 lots at 0.20 in March 2011.
Price went down in May and I thought why not since it is cheaper
Bought 50 lots at 0.11 in May.
Got internship pay and thought could invest in REA even more since cheaper bought another 40 at 0.09 in June.

Realised cheap can be cheaper and sold all out at Oct 2011 at 0.053-0.052. Lost about 10k.

Lesson:
1) Nvr follow/ rely on brokerage optimistic reports esp from PXXXXXX, this applies to all brokerages.
2) Read FS, BS, Cashflow. Importantly, do your own research.

2. Eratat (cant rmb the time I bought)
Read on a forum, how good eratat was.
Bough 65 lots at 0.137
Sold in Feb 2012 in class at 0.131 (sorry prof I was not listening in class :p)

Lesson: Forum's recommendation may be of good intention but please do your own research and analysis on the industry/company.

Side note: From this 2 lessons and a feel minor ones. I decided to "freeze" my POEMS/ Citibank acc and start afresh with a new perspective in investing. In May 2012, I signed up with SC, focused on value investing and swore not to follow the brokers recommendation. That's when I chanced upon VB.

FYI, if any1 is interested in my history. I started my journey on the market in Aug 2010. First stocks were Keppel, SMRT and Sunvic

Hi CY09,
Thanks for sharing for your experience.
Sad to hear abt your Renewable Energy Asia, quite similar to my Chartered Semicon case. (Heavy loss due to avg. down )

Earatat case, good that you sense something wrong and quit early.

(15-02-2014, 09:15 AM)Temperament Wrote: Relax. Relax.

Even WB lost money sometimes yet he is the most successful investor UTD. So are many current Great Investors/Traders.

And yes, i think none of the financial book authors recommend Pyramid Down. Because if you are wrong, you will most probably wipe out.
i think it's O.K. provided you limit your pyramid down with a "limit" and as many different stocks in different sectors as deem fit.
Another words, whatever you do, do limit and diversify.
There is no 100% sure thing in investment.

Me?
Of course, nobody will believe the stupid mistakes i had make even i have knowledge from my reading. (aka some are just too shameful to mention that i can't let anyone except my wife knows.)

Nothing teach you better then when your ass have been burned by the fire from the market.
Human beings are actually psychological irrational at times when come to financial matters.
And i think none of us can escape.
Don't think so?
Never committed stupid financial mistakes?
Wah! You better than WB and all the GREAT INVESTORS????
My 2 cents (commonsense).
Shalom.

Hi Uncle Temperament
( don't know appropriate to call you uncle or not, as myself is a middle age man in the mid life crisis ! )

Thanks for sharing your thought and kind words.

Well, I did learn something from the hard lessons, but then many years later, like you said, again committed similar mistakes again.
Human Nature !

(15-02-2014, 06:10 PM)Layman A Wrote:

(15-02-2014, 09:15 AM)Temperament Wrote: Relax. Relax.

Even WB lost money sometimes yet he is the most successful investor UTD. So are many current Great Investors/Traders.

And yes, i think none of the financial book authors recommend Pyramid Down. Because if you are wrong, you will most probably wipe out.
i think it's O.K. provided you limit your pyramid down with a "limit" and as many different stocks in different sectors as deem fit.
Another words, whatever you do, do limit and diversify.
There is no 100% sure thing in investment.

Me?
Of course, nobody will believe the stupid mistakes i had make even i have knowledge from my reading. (aka some are just too shameful to mention that i can't let anyone except my wife knows.)

Nothing teach you better then when your ass have been burned by the fire from the market.
Human beings are actually psychological irrational at times when come to financial matters.
And i think none of us can escape.
Don't think so?
Never committed stupid financial mistakes?
Wah! You better than WB and all the GREAT INVESTORS????
My 2 cents (commonsense).
Shalom.

Hi Uncle Temperament
( don't know appropriate to call you uncle or not, as myself is a middle age man in the mid life crisis ! )

Thanks for sharing your thought and kind words.

Well, I did learn something from the hard lessons, but then many years later, like you said, again committed similar mistakes again.
Human Nature !

No problem but i am really getting old already-coming 66. i had make 2 big stupid mistakes since my investing in the market. It is quite costly. i think about or >50K to 60K. Not to mention all the losing money stocks i bought. But overall i still survive and nett ++.
Shalom.
Amen.

-Buying a particular stock after reading about it a few times on internet forums.

-Buying a particular stock which a good friend recommended, telling me how fantastic this company was and it is a stock to keep for the next 20 years. In the end, i think he sold off the stock.

(16-02-2014, 01:33 AM)zquan Wrote: -Buying a particular stock after reading about it a few times on internet forums.

-Buying a particular stock which a good friend recommended, telling me how fantastic this company was and it is a stock to keep for the next 20 years. In the end, i think he sold off the stock.

A serious investor must do his home work and own research, by digging into the underlying businesses and assets behind the stock and evaluate them based on facts, and then make a judgement/decision based on rational thinking.

If an investor chooses to follow a friend, he better makes sure the friend is a serious investor himself and has a proven and long-enough track record of success in investing his own money for the longer term - as opposed to speculating - and is betting his own money too.

Here's to share my story.

When I first opened a trading account back in 2005/6, I had absolutely no clue what stocks to buy. I bugged my broker for a recommendation and she briefly mentioned this really hot stock that every investor was getting into. It had then recently acquired some <insert high tech jibberish> telecom network in Europe that was BUILT as a cost of EUR1 billion, paying just a nominal sum of 200 odd million. What a smart acqusition it seems.

There was so much promise. Analyst were pricing it 2-3 times the current traded price and it was touted as the next big thing (like most bubbly stocks). This said company, is none other than Global Voice (after renaming it 513428 times, it is currently known as euNetworks)

Filled with 10% enthusiasm and 90% naiveness, I went into this stock at $0.200. After a few days of small gains, it tanked and only when I stared at my paper loss of >30%, I've started doing my homework.

Lesson Learnt: I always like to use the Sydney Opera House as an illustration to my Global Voice investment. SOH was BUILT at a cost of $102million. The original cost and scheduling estimates in 1957 projected a cost $7 million. In actuality, the project was completed ten years late and more than fourteen times over budget.

Price is what you pay and value is what you get. The Network acquired may be built at a cost of 1 billion, but with no viable economic benefit attributed to it, it may very well be worth little or nothing at all. Paying 200 million for nothing is not exactly the smartest acquisition.

On hindsight, EuNetworks has never seen a profitable year since then and has been making rights issue all over the place with promises of a turn around the following year. I was lucky to be able to dump it at a slight profit (like 0.210 or something) at the market upturn, before all the Sh** starts to shed light. Thank God for gifting me my biggest mistake so early on in my investment journey.

Bought KINGSmen just after IPO on advice of "good" friend.
Average down all the way from abt 70cts to 30+ cts using cashline, credit card, contra..
In the end kanna force sold, and staring at a loss of almost 50k.

Lucky after that manage to get sm loans from family, and pick up several multi-bagger to recover..