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(This article originally appeared on The DIV-Net) When investor’s talk about mistakes it is often in relation to the “worst” investment mistake they ever made. I am going to turn this around today and talk about the “best” investment mistake I ever made.
This example is the “best” mistake because I learned a number of lessons from it. In fact, when I think of many of my investment mistakes I believe that I have learned more from them than I have from the investment moves that have done well. Sounds like that common axiom: “All men make mistakes, but only wise men learn from their mistakes” – Sir Winston Churchill.
The mistake in question is the purchase I made of a stock a long time ago. It was a forestry stock that I heard an investment “expert” talking about on the radio as I was driving my car. Getting very excited about this stock as I listened to him talk, I knew I had to act fast or I would miss the opportunity to make scads of money. I probably don’t need to tell you how this one worked out, but I lost money. It was only about $1000, but at the time it was a lot of money for me and it felt awful.
However, as I look back on it I realize that I learned more from this mistake than I have learned from many of my subsequent mistakes. Here are the three primary things I learned from this awesome mistake:
1. Never act on a stock tip
2. Never buy anything without thorough research
3. Never buy anything based on emotion, no matter how much your heart is racing
These lessons have stood the test of time for me and I have never made the same mistake again (I have made others of course – but that is the topic of another post). I challenge you to think of what your best investment mistake is and what you learned from it. Let us know using the comment section below.
This is a great flip on “worst investment.” I think you’re right-on with the lessons learned. All things considered, $1000 bucks isn’t so bad if you learned from it.
My best investing (almost) mistake was almost buying TiVo in 1999. The concept is sexy but the company has performed terribly. I too felt giddy about the stock and almost loaded up on it. Luckily I was talked out of it by a mentor. I’m glad I narrowly avoided it.
I had someone tell me about Enron, looked at it, and went, “What the hell does this company do?”, good question in hindsight, I never bought it. I had people tell me buy Bre-X and I almost did, but at the end of it my greatest blunder, which still haunts me is buying too much stock in the company I worked for (Nortel), that mistake I will NOT make again (cost more than $1000 unfortunately). –C8j
I would say getting too emotionally attached to a falling investment is a big mistake many people make. It keeps falling, but you believe in it so much, that you through more money down the drain. Thankfully I haven’t made that mistake…yet!
I have lost my fair share of money in the market before i made any..
if you learn from your mistakes you always become a better investor!