In the last post I got into one of my major mistakes. In this post I will get into some of the specific stocks that I bought when I first started “investing”, why I bought them, what I did wrong, and what I would have done differently, so hopefully you can learn from me and not lose some of your own money.
When I first started investing actual money my version of research was looking up the specific stocks ratios, seeing how much cash and debt they had, and seeing what people online were thinking about the companies, and the “Vast potential” the company had. That was it.
At that time I did not read any annual reports or quarterly reports. Did not even look at their competitors at all. Took the numbers I found online at face value, without any questioning of the numbers or adjusting them to look more realistic. I did not do any type of valuation or strategic analysis. And I took what the analysts and other random people online were saying about these companies as the factual truth, not just speculation, which is what it was.
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So pretty much when I first started using my own REAL money to buy these stocks I was doing everything you were not supposed to do. At that time not only was I way overpaying in most cases for these companies, but I was also buying a lot of bad companies. Not a good combination of things to be doing, and boy did I pay for it.
The following are the tickers of some of the early stocks I bought: NPD, LLEN, C, PRGN, YONG, SMED, LPH, TGB, and GA. All of those stocks I bought doing the above, which as it turns out is nothing, and I was pretty much just throwing my money away. Combined on the stocks I have sold above I lost at least $600. Including TGB which I still hold, brings that number up closer to an $800 total loss.
Luckily I was smart enough at that time to have small positions or the numbers would have been even higher.
I now read annual and quarterly reports. Dig into the numbers and scrutinize them more. Research competitors, do valuations, and just do better, and more diligent, overall research that sometimes takes me up to a month on one single company before I even think about buying.
It sure would be nice to have that money now to put to use, but I am glad I made those mistakes and would not take back those losses. If I would not have made those mistakes then my knowledge, experience, and pace of learning would have been stunted and I would not be doing what I am doing today. Making those mistakes made me want to get better at what I was doing and learn faster so that I would not make those mistakes again.
So keep coming mistakes. Keep coming so that I can keep learning at a fast pace. Keep coming so that I can gain the proper experience and perspective. Keep coming so that when my health finally gets better, I am not making as many mistakes, and that I am ready to either open up my own investment firm, or work for someone else at an investment firm.