Every investor makes mistakes. It’s inevitable. Even stock picking legends, like Warren Buffett, invest in stinkers.
He has admitted that his biggest stock mistake was buying US Airways in the early 1990s. An airline stock! Yikes!
I’m going to confess mine.
In 1989 I bought shares in Kmart. At the time, my reasoning was:
1. The Blue Light special was beloved.
2. It was the #2 retail chain in the nation.
Yes, I’m sure you can already tell where I went awry.
What company WAS the #1 retailer in the nation in 1989?
Why, Walmart, of course. But I didn’t buy the #1 retailer. I bought the #2 which, by the end of the next decade, was in serious financial trouble. I lost my shirt while Walmart shareholders went on to big gains during that time.
What lessons did I learn from losing a bunch of money?
There was a bunch of things but first and foremost I learned to always buy the #1 company. Don’t buy the second best.
I’ve had some other stinker trades over the years as well, but Kmart was my worst.
What was your worst trade? Did you learn any lessons from it?
Come on. You can admit it. You’re among friends.
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