How do you get over an investing mistake?

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Caduceus
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How do you get over an investing mistake?

Post by Caduceus » Wed Oct 23, 2019 6:06 am

Less than two years ago, I invested a significant amount of money into a particular small-cap stock that I had researched very deeply.

It has now roughly doubled in stock price over two years. But I sold slightly less than 15% of my position at the halfway mark, so I missed out on approximately 50% of the gains on 15% of this position.

I find myself being very, very, very unhappy every time the stock price increases, even though, rationally, I know I should be happy the 85% of my investment is rocketing upward. But I'm just unhappy that I made the mistake of thinking I could time my trades - I wanted to sell some, and buy back at a cheaper price, and I never managed to get in at a lower price because it just took off like a rocket. Every time it goes up, I mentally calculate the cost of the mistake of selling that 15%. To make things worse, this was all in a Roth IRA, so that 15% un-invested money and lost capital gains really adds up.

How do you get over mistakes like these, psychologically? I'm sure it's happened to many posters, but I'm not sure if you beat yourself up as badly over it as I do. I will do things like refuse to buy something I have saved up for a long time, or decide not to go on a trip ... to compensate for that mistake.

regularguy455
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Re: How do you get over an investing mistake?

Post by regularguy455 » Wed Oct 23, 2019 6:12 am

Instead of going up, it could’ve gone down. Then you’d be kicking yourself for not taking more off the table.

finsterfolly
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Re: How do you get over an investing mistake?

Post by finsterfolly » Wed Oct 23, 2019 6:12 am

I hope all my mistakes are as profitable as yours.

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bertilak
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Re: How do you get over an investing mistake?

Post by bertilak » Wed Oct 23, 2019 6:19 am

Time heals all wounds.

What doesn't kill me only makes me stronger.

A penny lost is a lesson learned. (I just made that one up!)
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

Silk McCue
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Re: How do you get over an investing mistake?

Post by Silk McCue » Wed Oct 23, 2019 6:23 am

Quite honestly your mistake was investing a significant amount of money in a single small cap stock. You got lucky and that luck may or may not continue. You should be thrilled that you didn't experience a huge loss due to a miscalculation on your part or a misstep by their senior management team. Your biggest regret may be yet to come if as a result of your regret over selling a piddly 15% you now cannot bring yourself to sell when you should.

We've all made mistakes in life, financial and otherwise, and if we relive them day after day we are robbing ourselves of the gift of today and our hope for tomorrow.

Be thankful the company you invested in wasn't pre-IPO WeWorks where the valuation just dropped from $40B to $8B and thousands of employees are being laid off due to huge missteps of the founder. This is a current news story.

Wishing you well.

Cheers

aristotelian
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Re: How do you get over an investing mistake?

Post by aristotelian » Wed Oct 23, 2019 6:30 am

If you commit to indexing you prevent such mistakes from happening. If you speculate (not invest) in individual stocks, you open yourself to mistakes and fear and greed will take over.

goblue100
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Re: How do you get over an investing mistake?

Post by goblue100 » Wed Oct 23, 2019 6:35 am

Come post when you research a stock deeply, and it is down 50% after 2 years. That mistake will hurt a little more.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

Grt2bOutdoors
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Re: How do you get over an investing mistake?

Post by Grt2bOutdoors » Wed Oct 23, 2019 6:46 am

Silk McCue wrote:
Wed Oct 23, 2019 6:23 am

Be thankful the company you invested in wasn't pre-IPO WeWorks where the valuation just dropped from $40B to $8B and thousands of employees are being laid off due to huge missteps of the founder. This is a current news story.

Wishing you well.


Cheers
It’s not hurting the exiting CEO much, his package is estimated to be valued at $1.7 billion. The model of WeWork is unsustainable, bad CEO or not, that house of cards was bound to fail. Thankfully the masses were not exposed to those losses, who do you think would have bought the IPO?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: How do you get over an investing mistake?

Post by Grt2bOutdoors » Wed Oct 23, 2019 6:49 am

goblue100 wrote:
Wed Oct 23, 2019 6:35 am
Come post when you research a stock deeply, and it is down 50% after 2 years. That mistake will hurt a little more.
The key is never to invest more than you can afford to lose. Research, research research may not prevent you from being exposed to a fraud, it will not protect you from “animal spirits both positive and negative”, and it may not protect you from your worse enemy - yourself! By owning a little, you stand to lose a little or you can gain a lot!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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RickBoglehead
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Re: How do you get over an investing mistake?

Post by RickBoglehead » Wed Oct 23, 2019 6:53 am

You did make an investing "mistake". The mistake was in not taking all your money off the table.

Invest $100. Doubles to $200. Take $100 out, play with someone else's money.

Seriously, if looking back at all your "lost opportunities" is something you fixate on, you a) shouldn't invest in stocks anyway and b) you may want to talk to someone.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

Silk McCue
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Re: How do you get over an investing mistake?

Post by Silk McCue » Wed Oct 23, 2019 6:56 am

Grt2bOutdoors wrote:
Wed Oct 23, 2019 6:46 am
It’s not hurting the exiting CEO much, his package is estimated to be valued at $1.7 billion. The model of WeWork is unsustainable, bad CEO or not, that house of cards was bound to fail. Thankfully the masses were not exposed to those losses, who do you think would have bought the IPO?
The point was companies with great expectations can fail, or disappoint pre or post IPO. History is replete with them. Don't get distracted by my example.

Cheers

Nowizard
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Re: How do you get over an investing mistake?

Post by Nowizard » Wed Oct 23, 2019 6:58 am

It sounds like the "problem" is the same as mine was, that without acknowledging it there is an underlying feeling you should be able to beat and time the market and that failure to do so is a slam on you rather than a learning experience. Mine was with ATT when they spun off Lucent and you could take Lucent stock or more ATT. I took Lucent which went up 8-10 times, then started down. "Knowing" it would come back, I did not sell until my profit was "only" about 20%, a "loss" of six figures. To make matters worse, I told friends who had a large gain in another stock and were questioning whether to keep or sell. Based on my experience, they sold...…...just before it started going down! Welcome to a club with many members that none of us wishes to join. Realistically, if you invest reasonably, you will obtain excellent results and accept you cannot always make the perfect decision. However, the experience does add confirmation to the accepted fact that we are more tormented by our investing mistakes than happy about our investing successes.

Tim

FI4LIFE
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Re: How do you get over an investing mistake?

Post by FI4LIFE » Wed Oct 23, 2019 7:06 am

I bought Crocs (CROX) in 2007. Come talk to me when you've done something that stupid. Your shares are up. It's like crying because you ate the filet mignon instead of the lobster.

finfire
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Re: How do you get over an investing mistake?

Post by finfire » Wed Oct 23, 2019 7:13 am

Keep busy.

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Psyayeayeduck
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Re: How do you get over an investing mistake?

Post by Psyayeayeduck » Wed Oct 23, 2019 7:15 am

Stop focusing on the A+ whereas a passing grade does the same job.

cherijoh
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Re: How do you get over an investing mistake?

Post by cherijoh » Wed Oct 23, 2019 7:18 am

Caduceus wrote:
Wed Oct 23, 2019 6:06 am
Less than two years ago, I invested a significant amount of money into a particular small-cap stock that I had researched very deeply.

It has now roughly doubled in stock price over two years. But I sold slightly less than 15% of my position at the halfway mark, so I missed out on approximately 50% of the gains on 15% of this position.

I find myself being very, very, very unhappy every time the stock price increases, even though, rationally, I know I should be happy the 85% of my investment is rocketing upward. But I'm just unhappy that I made the mistake of thinking I could time my trades - I wanted to sell some, and buy back at a cheaper price, and I never managed to get in at a lower price because it just took off like a rocket. Every time it goes up, I mentally calculate the cost of the mistake of selling that 15%. To make things worse, this was all in a Roth IRA, so that 15% un-invested money and lost capital gains really adds up.

How do you get over mistakes like these, psychologically? I'm sure it's happened to many posters, but I'm not sure if you beat yourself up as badly over it as I do. I will do things like refuse to buy something I have saved up for a long time, or decide not to go on a trip ... to compensate for that mistake.
I suggest you stop picking individual stocks. If you are beating yourself up this much for losing out on a little extra profit, imagine how badly you will feel if you pick a loser.

sambb
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Re: How do you get over an investing mistake?

Post by sambb » Wed Oct 23, 2019 7:19 am

Had an acquaintance that turned down the job as one of the first 100 employees in a now enormous tech co, and he would be worth 50-100mill if he hadnt turned it down. Life happens.

I always think about the fact that top 1% of worldwide income is ~35k USD a year.

Keeps it in perspective.

MIstakes can happen in stocks, jobs, relationships, and tons of other things.

carolinaman
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Re: How do you get over an investing mistake?

Post by carolinaman » Wed Oct 23, 2019 8:29 am

You have to realize investing, especially volatile individual stocks, is very inexact. There is no reason to get upset because the results are unpredictable. I used to invest in individual stocks and active mutual funds. Despite my best research, things often did not go as planned. I won some and lost some. I finally decided to invest in low cost index funds and take what the market gives me. I have a 7 figure portfolio but often go days and sometimes more than a week without looking at market results. I do not get excited or upset when the market drops. That is what markets do. Why should I get upset.

I think you need to recognize the reality that none of us can control the market or specific investments. Develop an investment strategy for the long term and do not worry about short term incidents like this. If you want to invest in individual stocks, recognize you will win some and lose some. Do not fret about the losses. Life is too short for that.

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CyclingDuo
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Re: How do you get over an investing mistake?

Post by CyclingDuo » Wed Oct 23, 2019 8:35 am

Caduceus wrote:
Wed Oct 23, 2019 6:06 am
But I sold slightly less than 15% of my position at the halfway mark, so I missed out on approximately 50% of the gains on 15% of this position.

How do you get over mistakes like these, psychologically? I'm sure it's happened to many posters, but I'm not sure if you beat yourself up as badly over it as I do. I will do things like refuse to buy something I have saved up for a long time, or decide not to go on a trip ... to compensate for that mistake.
You only sold less than 15% of your position. Not even worth beating yourself up over....

Do you have things you have purchased in your house and garage that are not getting used as much as you thought they would when you bought them? You are allowed to beat yourself up over those purchases. 8-)
"Everywhere is within walking distance if you have the time." ~ Steven Wright

clammyhands
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Re: How do you get over an investing mistake?

Post by clammyhands » Wed Oct 23, 2019 8:44 am

Don't sweat it. Be grateful you didn't lose money.

I read all about becoming a Boglehead back in 2012 and still proceeded to trade in individual stocks not long after that. I ended up losing quite a bit of money when a couple of the stocks totally tanked and didn't recover. I use that mistake and those negative feelings to strengthen my resolve in the Boglehead philosophy. I'll never trade individual stocks again.

barnaclebob
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Re: How do you get over an investing mistake?

Post by barnaclebob » Wed Oct 23, 2019 8:47 am

The real mistake would be thinking your research and success is reliably repeatable.

BogleMelon
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Re: How do you get over an investing mistake?

Post by BogleMelon » Wed Oct 23, 2019 8:52 am

Caduceus wrote:
Wed Oct 23, 2019 6:06 am
How do you get over mistakes like these, psychologically?
By recognizing some facts:
- Never confusing strategy and outcome.
- Hindsight is 20/20, and you might have taken the best decision back then based on the information available back then and there was no way back then to know today's information because it was "the future" and no one knows the future!
- Putting a lot of eggs in one basket is too risky, too emotional, and the stock could go the other way, and you may start losing big money due to having 85% of your initial investment in it. You are basically gambling. If you recognize you are gambling, and still can't get out and at the same time your position in that stock is causing you stress and anxiety, you might need some professional help.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

FireHorse
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Re: How do you get over an investing mistake?

Post by FireHorse » Wed Oct 23, 2019 8:54 am

Focus on half glass full instead of empty

BogleMelon
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Re: How do you get over an investing mistake?

Post by BogleMelon » Wed Oct 23, 2019 8:54 am

barnaclebob wrote:
Wed Oct 23, 2019 8:47 am
The real mistake would be thinking your research and success is reliably repeatable.
+1
OP was just lucky
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

MotoTrojan
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Re: How do you get over an investing mistake?

Post by MotoTrojan » Wed Oct 23, 2019 8:55 am

Have an exit plan. Sounds too willy-nilly.

Vanguard Fan 1367
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Re: How do you get over an investing mistake?

Post by Vanguard Fan 1367 » Wed Oct 23, 2019 9:05 am

I spent a dollar on one of Peter Lynch's books on investing at a garage sale. I bought some stocks and got way more than a dollar using Lynch's advice.

20 years later I decided to read The John Bogle Reader. He convinced me to go with indexing and forget about individual stocks. A big benefit is that I don't have my wife beating me up over things like selling Johnson and Johnson stock a while back. I also don't beat myself up over when to buy and sell individual stocks. I love indexing.

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Re: How do you get over an investing mistake?

Post by ReformedSpender » Wed Oct 23, 2019 9:15 am

goblue100 wrote:
Wed Oct 23, 2019 6:35 am
Come post when you research a stock deeply, and it is down 50% after 2 years. That mistake will hurt a little more.
+1

/End Thread

:beer
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

retired@50
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Re: How do you get over an investing mistake?

Post by retired@50 » Wed Oct 23, 2019 9:19 am

It appears that you've found your kryptonite. If investing in individual stocks gives you fears, regrets, bad feelings of any kind, then don't do it. In other words, set up an investment system that doesn't allow for regret. Buy into stock and bond index funds with modest amounts from every paycheck until you stop working. Turn off CNBC, stop reading financial websites... Whatever it takes to eliminate regret, and avoid these pitfalls, is the investment system FOR YOU. Best of luck.

bradinsky
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Re: How do you get over an investing mistake?

Post by bradinsky » Wed Oct 23, 2019 9:40 am

Consider yourself fortunate! If that is the worst mistake that you ever make in your lifetime of investing, you will be a very lucky & blessed individual.

wolf359
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Re: How do you get over an investing mistake?

Post by wolf359 » Wed Oct 23, 2019 9:52 am

It is possible to make a poor decision and have a good outcome. For example, let's say I'm travelling somewhere that is 30 miles away and decide to ignore all traffic lights. If I safely arrive at my destination 15 minutes later, does it mean that my decisions were good?

I have insufficient information to determine if you made a good decision or if you made a mistake.

This might have been a good decision if you took a calculated risk with investing in this individual stock. A calculated risk means that while you invested a significant amount of money, it wasn't a large part of your net worth, and if the worst case scenario happened (company runs into trouble and gets wiped out), it might hurt, but you still have more than enough to meet your long-term goals. If this describes you, then your decisions are sound. (If it doesn't, then holding that much in one stock may be inadvisable.)

The scenario you described (selling 15% of your holdings) would be a good decision if you did it with the intention of taking some money off of the table, locking in some of your profits, while letting the rest run. The fact that the stock continued to climb after that point does not negate the quality of the decision. The future performance of the stock could not have been predicted in advance - it was equally plausible that the stock might have dropped or gone sideways.

Now that the stock has doubled, your decision to hold onto all of the remaining shares and not lock in more profits may be an actual mistake. It depends upon knowing your goals and your overall picture. Only you have that information.

I've been through multiple market cycles, and have traded in individual stocks as well. During a bull market phase, everybody thinks they're a genius. But the market always climbing lulls people into a sense of just buy and never sell. If anything, people want to buy more of the winners. But all bull markets will eventually end. Winter is coming. What climbed fast can also fall quickly. And individual companies can fall to zero, wiping out your position completely. A friend of mine once had $2 million in WorldCom stock, acquired very quickly. It got wiped out in the tech crash (and the WorldCom fraud/bankruptcy). He's a millionaire again, but this time it almost 20 years of saving and investing. More recently, I've seen other friends struggle and have to start over after 2008.

The Boglehead strategy of assuming no special knowledge of the stock market, selecting an appropriate asset allocation, and holding a widely diversified portfolio of low cost index funds is a much better strategy. While individual companies may fail, I have confidence that every public company in the US stock market will not fail simultaneously (I own the Total US Stock Market index). It's boring, but it's predictable.

I do set aside some funds for other investments, but I will achieve my goals with index funds in an acceptable amount of time. There's room in Bogleheads for investing in individual stocks, but make sure that downturns won't knock you out of the game.
Last edited by wolf359 on Wed Oct 23, 2019 10:52 am, edited 1 time in total.

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Re: How do you get over an investing mistake?

Post by pkcrafter » Wed Oct 23, 2019 10:03 am

It was not a mistake. The actual mistake was not taking more off the table. What you describe now is greed, not smart investing. No matter how much you researched it, it could have failed.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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goingup
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Re: How do you get over an investing mistake?

Post by goingup » Wed Oct 23, 2019 10:05 am

barnaclebob wrote:
Wed Oct 23, 2019 8:47 am
The real mistake would be thinking your research and success is reliably repeatable.
That's definitely my perspective, too.

I certainly had my years of owning individual stocks. Never got very lucky and certainly got unlucky several times. Never liked having to decide to hold, buy or sell. Didn't enjoy spin offs. (Think GM with AC Delco, EDS, Hughes, etc.).

Owning broad index funds was liberating. Simple to buy and hold without regret. Over 20 years of consistent investing, the returns have plenty good and good enough. :beer

Silk McCue
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Re: How do you get over an investing mistake?

Post by Silk McCue » Wed Oct 23, 2019 10:06 am

wolf359 wrote:
Wed Oct 23, 2019 9:52 am
What you are describing as an investing mistake doesn't sound like one to me. Please don't be offended, but it sounds more like a humblebrag.
...
I don't see how anyone could read the entirety of the OP's post and somehow construe that this was a humblebrag. They were very transparent about how they were not dealing with this very well. We have real humble brags that show up from time to time but I don't see that in this post.

Your response would have been more valuable had you not passed judgement on their motivations in this case.

Cheers

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MrBobcat
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Re: How do you get over an investing mistake?

Post by MrBobcat » Wed Oct 23, 2019 10:26 am

Caduceus wrote:
Wed Oct 23, 2019 6:06 am
Less than two years ago, I invested a significant amount of money into a particular small-cap stock that I had researched very deeply.

It has now roughly doubled in stock price over two years. But I sold slightly less than 15% of my position at the halfway mark, so I missed out on approximately 50% of the gains on 15% of this position.

I find myself being very, very, very unhappy every time the stock price increases, even though, rationally, I know I should be happy the 85% of my investment is rocketing upward. But I'm just unhappy that I made the mistake of thinking I could time my trades - I wanted to sell some, and buy back at a cheaper price, and I never managed to get in at a lower price because it just took off like a rocket. Every time it goes up, I mentally calculate the cost of the mistake of selling that 15%. To make things worse, this was all in a Roth IRA, so that 15% un-invested money and lost capital gains really adds up.

How do you get over mistakes like these, psychologically? I'm sure it's happened to many posters, but I'm not sure if you beat yourself up as badly over it as I do. I will do things like refuse to buy something I have saved up for a long time, or decide not to go on a trip ... to compensate for that mistake.
I used to think I was smart and could research individual stocks and beat the market. It took me a while to figure out I was deluding myself and it was pure luck (good or bad) that determined how I did. My investing anxiety has plummeted since divesting myself of individual stock holdings and going to the 3-fund portfolio. Am I going to hit a 10 bagger indexing? Nope. Am I going to see my Worldcom go to zero? Nope. Do I have a framework to develop a reasonable plan of savings, balancing risk/reward, for reachable goals? Absolutely.
Last edited by MrBobcat on Wed Oct 23, 2019 10:27 am, edited 1 time in total.

StandingRock
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Re: How do you get over an investing mistake?

Post by StandingRock » Wed Oct 23, 2019 10:26 am

Caduceus wrote:
Wed Oct 23, 2019 6:06 am
Less than two years ago, I invested a significant amount of money into a particular small-cap stock that I had researched very deeply.

It has now roughly doubled in stock price over two years. But I sold slightly less than 15% of my position at the halfway mark, so I missed out on approximately 50% of the gains on 15% of this position.

I find myself being very, very, very unhappy every time the stock price increases, even though, rationally, I know I should be happy the 85% of my investment is rocketing upward. But I'm just unhappy that I made the mistake of thinking I could time my trades - I wanted to sell some, and buy back at a cheaper price, and I never managed to get in at a lower price because it just took off like a rocket. Every time it goes up, I mentally calculate the cost of the mistake of selling that 15%. To make things worse, this was all in a Roth IRA, so that 15% un-invested money and lost capital gains really adds up.

How do you get over mistakes like these, psychologically? I'm sure it's happened to many posters, but I'm not sure if you beat yourself up as badly over it as I do. I will do things like refuse to buy something I have saved up for a long time, or decide not to go on a trip ... to compensate for that mistake.
I would say, just wait a while until the stock goes to 0, and then you will feel happy about your decisions.

wolf359
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Re: How do you get over an investing mistake?

Post by wolf359 » Wed Oct 23, 2019 10:51 am

Silk McCue wrote:
Wed Oct 23, 2019 10:06 am
Your response would have been more valuable had you not passed judgement on their motivations in this case.

Cheers
My apologies. I have edited my response.

DetroitRick
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Re: How do you get over an investing mistake?

Post by DetroitRick » Wed Oct 23, 2019 10:55 am

Don't fixate on a single position, ever. All investors, at least those lacking ESP, will make mistakes or do things that in retrospect prove to be sub-optimal. It's part of the investing process for all mortals. Your investment strategy and tactics should be designed to prevent catastrophic mistakes. Measurement can reveal these after the fact, and provide a learning mechanism for you for the future.

But the biggest thing I interpret from what you said, relates to diversification. It's certainly no less important with individual stocks than with all the other vehicles. Worrying about a single position implies that you may not have a diversified portfolio. I keep hearing people talk about a rough history with investing in individual stocks. But they often do not have sufficient positions to achieve their goals. Of course diversification is not a cure-all, but it's a necessary part of investing. But if I had, say, only a 10-stock portfolio, I have no idea how good or bad my own results would be over time.

I maintain one broad portfolio of individual stocks. It does just fine and always has, even through the 2008-9 downturn in relative terms. There are times when it under-performs its benchmarks, and times where it outperforms. The later is more prevalent, or obviously I wouldn't do it. But the breadth of positions permits me to make mistakes without catastrophic results from any individual positions. It is a lot of work and involves a lot of positions. But I enjoy it, so who cares? Of course I've made some stupid decisions, but I've learned from each and every one. For every Apple, there is a Theranos or Enron.

Look back only to learn lessons and then more forward. There is no level of research than can ever guarantee the performance of a single position. Remember Buffett makes mistakes too - just not too many.

Broken Man 1999
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Re: How do you get over an investing mistake?

Post by Broken Man 1999 » Wed Oct 23, 2019 11:17 am

Hey, I lost money on Cisco stock TWICE. :oops:

If one desires to buy individual stocks, you must make TWO decisions: When to buy. When to sell.

I have never bought an individual stock at the lowest price. I have never sold an individual stock at the highest price. There is room in between the low and the high to make money.

Also remember this: Bears make money, bulls make money, but pigs get slaughtered.

Trying to wring out the last dollar of upside when you sell isn't a good strategy. Sometimes it works, sometimes it doesn't.

OP, at what price will you sell your remaining stock? Doubling in two years isn't bad. Sometimes I sell half my holding when the price doubles.

You do need to figure an exit strategy, as your stock could tank.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Mullins
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Re: How do you get over an investing mistake?

Post by Mullins » Wed Oct 23, 2019 11:31 am

You've let your emotions get involved. You see it as a a loss and I see it as a gain. Changing your perspective and thoughts about it will change how you feel about it. What's more, people tend to remember the bad stuff and feel its pain over remembering the good stuff and delighting in its pleasure. Don't fall for that.

Also, whenever you trade cash for equities you are buying something which has volatility (which is a mixed blessing) and risk in exchange for a hoped for reward. You did the best you could given your knowledge and with the information you had at that time. If you're going to lament what in hindsight turned out to be not the better decision, you will never be happy.

But I'd also see it was a warning about handling individual stocks.

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Caduceus
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Re: How do you get over an investing mistake?

Post by Caduceus » Fri Oct 25, 2019 9:44 am

The advice to invest in index funds is well taken. If you take a look at my early posting history, you will see that I've said the same thing to posters. I was pretty much a die-hard indexer early on when I read the works of Bogle, Malkiel and Bernstein. So I do understand that over long periods of time, the vast majority of people do not beat market indexes.

But I am also convinced that it is possible to make good, solid investments in individual companies the same way that people buy businesses and are able to value them. I don't know how to value General Electric - reading their pension accounting alone makes my head spin. But sometimes you find some weird things that you know are way undervalued. This was the only position I found in several years that had more cash in the bank than their market value, was carrying relatively little debt, and hadn't made a loss in several decades. I think Bogleheads can be overly theoretical sometimes. If I sell you a wallet with $100 in it for $50, you don't need to be a genius to buy it. You get $100 for $50, and the wallet for free. If you look very hard, you might find one of these companies for ever few hundred you look at.

The mistake I made wasn't buying into this position but trading it. I knew it was still trading at a far lower price than what it was worth. If the stock had tanked because of an analytical mistake I had made and I lost money because of that, I think I would be far more comfortable with that. But this mistake I made was just a matter of a lack of self-control. And I find that publicizing my mistakes makes me less likely to repeat them. I've told everyone I know about this mistake so that I can be sure to keep getting reminded of it. The goal is to make this so painful I won't repeat it.

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Phineas J. Whoopee
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Re: How do you get over an investing mistake?

Post by Phineas J. Whoopee » Fri Oct 25, 2019 12:21 pm

I have two comments, one substantive and one glib. We'll take care of the glib one first:

Stocks do not work like savings accounts.

Here's the substance: any equity investment, like any investment at all, involves risk. There's risk of losing money. There's risk of making less money than one might have. There's risk (in terms of uncertainty of outcome) of becoming fabulously wealthy.

You already knew that, I suspect.

You took a risk. You took an action. The action worked out as it did. That's all.

The lesson isn't to avoid risk. The lesson is to recognize risk when you take it.

You came out ahead of where you were before. That won't necessarily happen ever again.

For equities I stick with total-market index funds. I don't know what you should do.

Does that help?

PJW

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Wiggums
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Re: How do you get over an investing mistake?

Post by Wiggums » Fri Oct 25, 2019 12:32 pm

RickBoglehead wrote:
Wed Oct 23, 2019 6:53 am
You did make an investing "mistake". The mistake was in not taking all your money off the table.

Invest $100. Doubles to $200. Take $100 out, play with someone else's money.

Seriously, if looking back at all your "lost opportunities" is something you fixate on, you a) shouldn't invest in stocks anyway and b) you may want to talk to someone.
+1

I bought a fund and it immediately tanked. That’s when I learned to stop logging in and checking my balance all the time. It took about 10 years for the fund to break even and 5 more years to give me a 50% profit. As soon as I sold it, the fund doubled in price. No more media and telecom for me. Index funds since then.

Equities come with all kinds of risk. It’s never a bad day when you make money. Move on.

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Re: How do you get over an investing mistake?

Post by Fallible » Fri Oct 25, 2019 1:19 pm

Caduceus wrote:
Fri Oct 25, 2019 9:44 am
...
The mistake I made wasn't buying into this position but trading it.
Whether there was no mistake made in buying this stock (not the later trade, but the initial buy) would seem to depend on how long the stock does well and how long you intend to keep it. It also depends on whether the initial buy was all skill, or whether luck also was involved, which it usually is. I don't buy individual stocks because I can't complete with the pros, at least the best of them who know where their skills and luck come into play.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

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