Mistakes I’ve Made So Far With My Portfolio

This portfolio is just about 3 years old now, having gotten its start on 8/30/2013. A reader on Facebook suggested that I go over some of the mistakes I’ve made and some of the things I’ve learned. So here goes:

Big Mistakes

1) I lost $12,032 on CHK and buying it was clearly the biggest mistake I made. You can see why I bought the stock here and why I sold it hereFirst of all and most importantly, I know nothing about Chesapeake’s business which is oil, gas, and natural gas liquids. I mean, I really know ABSOLUTELY NOTHING about that field which made it very hard to figure out how long to hold the stock. Everything seemed to go wrong wth the company and I’m glad I gave up and sold it when I did because the price of the stock sunk much lower than my selling price and is still below it. What I learned: Maybe I should stick to stocks of companies that are in businesses that I at least know something about. 

2) I made $4,702 on Facebook but my mistake was selling WAY too soon. I sold the stock at $87.27 and it now trades for $129.07. Multiply that difference by my 300 shares and you get $12,540 that I left on the table! You can see why I bought FB stock here and why I sold it here. I sold the stock because the market was deteriorating and because I was afraid that in that environment, Facebook might get hit harder than other stocks because of its high P/E. I planned to buy it back at a another time if the stock went lower which it never did and I never bought it back. So, I tried to time the market a bit like I always preach against and this shows why that is so hard. I must also add that I didn’t fully comprehend just how dominant Facebook was and is and how they were and are hitting on absolutely all cylinders. What I learned: When you try to time the market by selling and then hopefully buying back later at a lower price, it rarely works. But I already knew that so I just proved it to myself yet again!

3) So far I’ve lost $6,196 on American Airlines and I really wish I never bought the stock. I’m still holding the shares which might turn out to be a good or a bad thing but you can read why I bought AAL here. Despite record revenues for several quarters, the stock price has gone down and just won’t go back up. This is kind of a head scratcher for me as it seems that investors are unwilling to reward good performances in the airline industry like they are in other industries. This could be due to the inherent risks all airlines face such as terrorism threats, Zika virus type threats, bad weather affecting air travel, and the fact that the planes themselves are so terribly expensive and valuable that if something happens to one of them it can make a big den’t in the bottom line. What I learned: I will never buy another airline stock in my life because too many things can go wrong.

Smaller Mistakes

1) To date I’m down $4,903 on Ford but I’ve also been paid around $2,000 in dividends which makes brings my loss down to around $2,903. You can read why I bought F stock here. This is another stock where I’m not exactly sure why investors won’t give the company a break. I believe it has less to do with Ford specifically and more to do with the fear that Uber, Lyft, and the future of self driving cars will mean fewer cars are made and sold. There is a tremendous amount of hype about the possibility that we are going to live in a future where we don’t individually own cars anymore but share them with others. Ford stock gets hurt by that kind of speculation which is all it is at this point. Ford is doing well and now pays a big 4.8% dividend which is the main reason I am keeping it. What I learned: Nothing really and I hope the stock heads back up at some point. 

2) I’m down $$4,254 on Gilead and you can read why I bought GILD here. This is another example of a stock that is in a business that I know very little about which hurts my ability to know whether to hang on or sell. I do know that the election and a certain candidate thinks drug prices are too high and that is bad for any and all drug companies. Other than that, the company seems solid, pays a decent dividend, and is cheap on a P/E ratio basis. I’m holding and have only owned the stock for a year so I will give it longer. What I learned: Just the same lesson that when I invest in companies that I don’t really understand, it makes it difficult to make “hold” or “sell” decisions. 

Final Thoughts

So that’s it. Those are the mistakes or possible mistakes I have made thus far. All the other stocks I have chosen to buy have resulted in gains or much smaller losses that can’t be categorized as mistakes.

Investing in the stock market isn’t easy and you have to go into it knowing that you will make some errors. Hopefully your bad decisions will be minor ones and you can limit the damage. CHK and FB were big mistakes for me and the two I obviously regret the most but there is nothing I can do but move on and try not to repeat the mistake in the future. One thing is for sure, when you start investing in individual stocks, there are endless opportunities to second guess your decisions or non-decisions. Its just something you have to get used to and not let bother you. 

6 Responses to “Mistakes I’ve Made So Far With My Portfolio”

  1. Luis Camargo says:

    Hello Bruce,

    I am about to start investing on the stock market, hopefully by the first week of November, I will turn 20 on January and I would like to do it before then. I am so glad that I found your website. I find it very easy to understand and very helpful. Thank you so much for sharing your experiences with investing on stocks.

  2. Kirby says:

    Hi Bruce!

    Thank you for your website and your transparency (which is refreshing). Although you made a couple of unfortunate choices (in hindsight), we all do (or will). However, I think you have laid out some great/fundamental lessons for your readers from which to learn . In the end though, your portfolio is in the “green”. Kudos and best of luck to you and your readers!

  3. Brandon says:

    Hey Bruce,

    I once have been told that in order to have a succesful portfolio you must do a thorough analysis before purchasing any stock. Further more a minimum of 20 minutes per week, per stock, should be spent staying updated on news/information that is relative to each of your holdings. “People who have more than 8 to 10 holdings are simply guessing most of the time. In order to be succesful you cant guess, you have to know. That means knowing everything(at least most) about how the company operates, where their income is coming from, and how they stack up against their peers.”

    I have found this information to be very helpful for me. I opened my first brokerage account last November and funded it with $4k. I am now up 22% for the year this far.

    I think this site is great. Would have been helpful for when I first started.

    Take care

    • Bruce Alan says:

      Thanks for reading Brandon. I just try to at least read the news headlines for each stock each week to see whether anything of any substance has happened. That can be done reasonably quickly and many stocks have very little news coming out. Now Apple is different, with dozens of things being written every day with more than 95% of it being garbage.

Back to Top