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Building Wealth through Saving and Investing

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Spending and Investing Regrets

Canadian Dream suggested that I write about my spending regrets. To be completely honest, I’m extremely picky and analytical before making any big consumer purchase, so I rarely regret what I purchase.

However, I do have a big investment regret that I hesitate to mention, but I will for your entertainment. :)

The Setting

It was back in 2001 when Nortel was taking the big plunge. Yes, you heard me right, the dreaded Nortel. At the time, I was on a work term with Nortel themselves, so there was a lot of talk about the stock. I was young and extremely new to the stock market but had some cash to “get rich quick with“.

The Scenario

The stock a couple months back made a new high of $120, and the market was euphoric. Those who didn’t get into the stock were hitting themselves for not having the foresight, like myself. The stock starts to drop like dead weight, bargain hunters are starting to watch. As the stock drops to around $60, the office starts to buzz, and one guy drops his entire $50,000 retirement fund into the stock! So I’m thinking, I have $3000 saved, which could easily double to $6000…
The Consequences

My original $3000 investment has turned to $100 and to this day I still hold the stock. Why do you ask? When I get a big capital gain year, I’ll sell my Nortel stock for a loss to off set my gains to reduce my tax payable.

The Lessons Learned:

  • Never trade hot stock tips unless you do your OWN due diligence first.
  • Don’t jump into the stock market unless you know what you’re doing.
  • Don’t invest more than you can afford to lose.
  • If you’re going to invest in the market, learn about technical analysis also, it can really help you decide on your buy/sell points.
  • Learn from your mistakes!

So that’s my story, do you have an investment regret?







9 Comments, Comment or Ping

  1. Hi FT,
    when thinking about losing money and investment regret, I always think about my last year story (http://www.thefinancialblogger.com/?p=49). I was making so much money (+71%) than I decided I was smarter than the market. NEVER make such assumption. The market taught me that in one single day. I a lost one third of my trading portfolio in one single day. It was painful, but at least I learned my lesson: never think you are smarter than the stock markets.
    FB

  2. I am curious as to why you still hold Nortel. Isn’t it better to sell and move on? It is a $100 investment today. If it doubles, you’ll make a grand $100 in profit. Why even bother with such a small position?

    Holding on for a gain on another stock doesn’t make much sense because you can carry forward your capital loss indefinitely.

  3. 3. Warren

    Personally I regret not having the “guts” to invest in Uranium about 3 years ago, when I looked at all of the options and thought it would be a good buy. I was (and still am) new to investing, and had a tough time putting my money where my mouth (and gut) were. Depending on the nature of my investment, I could have made 2 to 5 times my money by now.

  4. CC: I had no idea that you could carry forward the capital loss indefinitely. I always thought that you had to claim it in the same year which is why i’ve been holding it all these years. :) Perhaps it is time to sell and move on.

  5. FT,

    Actually you can also carry a capital loss back to any of your previous gains in the last three years as well.

    Thanks for the post. It’s always nice to hear that despite all our reading/learning we PF bloggers are still human.

    CD

  6. My biggest mistake ever was shorting a rising stock in 2002. It went up about 150% before I gave up and covered.. In hindsight, I shorted at the bottom and covered at the top.. Subsequently the company went below my entry price. :-(

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