My Biggest Financial Blunder

Written by The Dividend Guy on August 22, 2006

We all make mistakes, especially in investing. I have and will continue to do so (I am no expert) As one who is constantly trying to improve my returns I make sure that I try my best to learn from these mistakes. It got me to thinking about what types of mistakes investors make. Based on some digging around, and my own gut feel, I think that the top 3 most common mistakes investors make are as follows:

1. Taking stock tips
2. Churning your account
3. Not watching fees

All three of these can have drastic implications on your portfolio. My greatest financial blunder was in reference to #1 - taking stock tips. This was a good 10 years ago and I was speaking to a co-worker of mine and he basically said that he heard from a guy whose brother-in-law knows a priest who spoke with a broker’s wife about a stock called Micro-somthingorother (I for the life of me cannot remember the name) that was going to be bought by Nortel. I turned around and bought about $2000 worth of the shares (remember this was 10 years and to me that was a ton of money). Sure enough the company was not bought and down the stock went. I finally sold my position after losing about $1200. It hurt but I look back on it and I am glad it happened. It made me a better investor and much more pragmatic in my approach. I have not taken a stock tip since.


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1 Comment so far

  1. finance girl August 22, 2006 8:27 pm

    Well here’s one that’ll make you feel better. My cousin has a relative who works for Calpine, and 5 years ago this Calpine relative was telling him and other family members to “buy calpine!!!” well they all did, of course, without batting an eye. They bought it for over $35 and today? Well if you know about this one, it’s messy. Calpine is the 8th largest US bankruptcy and today it’s stock is around 32 cents. AND, they didn’t sell!!! They held onto it and say to this day “oh, it will go back up! crazy!!!

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