Friday 1 March 2013

Investment Mistakes Made 2012

I find that it is important to list the mistakes that I make. Each year I will therefore conclude with a post concerning the mistakes that I made.

Mistakes 2012:

  • Bought Q-Cells after knowing the they would go insolvent. I did it because I wanted to test the principle of what happened when a company in Germany went insolvent that had a P/B value below 1. It should mean that money should be payed out to the shareholders. In Germany, less frequently than in the US, they make a restructuring of the company and gives the creditors shares in the restructured company. Happily for me they decided to restructure and I sold the stocks after owning them for only 2 days. Took only a very small loss upon the biggest being the buy and sell fee. Still it was very stupid of me!
  • I bought BP stocks far too early. Still the litigations are not over and I could buy the stocks today even cheaper then what I bought them for. Never buy into a litigation. I had read this rule in "The Intelligent Investor" but had obviously already forgotten about it when I bought the BP shares.
  • Did not sell and re-buy stocks with a significant loss. In Germany you can only equilibrate stock profits with stock losses, even dividends are unfortunately excluded from that. However this means that when you have a loss in a stock it can be worth to realise it especially since a loss stays until you can equilibrate it with a gain, meaning that if the loss is not used then it gets carried over to the next year. There might be a time aspect on the sell and re-buy so please check the rules on this one!
  • I think that my criteria for increasing my shares in a company is maybe too early. If one of my stocks drop down by around 25-30% then I step in and buy more when it is cheap. Many times the stocks dropping have continued to drop further. Almost in every case. Maybe I will increase the border to a 40-50% decrease for buying more.

Mistakes before 2012:

  • Buying plenty of IPOs and never ever stepping out. Everytime when they increased the number of shares I stupidly went along and gave them even more of my money.
  • Allowing other people than myself handling my money.

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